With $900m IPO, lending company Qudian leads pack of Chinese fintech firms aiming to go public

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Chinese consumer lending company Qudian raised a whopping US$900 million in its initial public offering (IPO) on the New York Stock Exchange – the largest US listing ever by a Chinese fintech firm.

Founded in 2014, Qudian offers a range of credit services to Chinese consumers, such as small cash loans and installment-based payment for smartphones, cameras, and laptops. From January to June, the average micro-loan on Qudian was about US$139. Last year, the company recorded a net income of US$87 million.

The Beijing-based fintech company uses machine learning to assess credit and process loan applications. According to its IPO prospectus, Qudian processed more than 9,500 credit withdrawals and 21,000 repayments per hour over a three month period ending in June. Repayments and loan distribution are done through popular mobile payment app Alipay, which is operated by Alibaba financial affiliate Ant Financial.

As of 2015, only about a third of China’s population had a credit history. Due to this dearth of official credit data, many domestic fintech startups, including Qudian, have turned to alternative data sources: ecommerce data, mobile phone records – even applicants’ social network. These data points are then spun into various risk and credit assessment models using machine learning, making it possible to make credit decisions in just a few minutes – without human intervention.

See: How fintech startups are using big data to solve China’s huge credit gap

A number of Chinese fintech companies are aiming to go public in the next year or two, such as Shanghai-based lending company Dianrong and Lufax, a peer-to-peer lending and online wealth management company. Just last week, one of China’s first online lending platforms PPDai filed documents to list in the US, hoping to raise US$350 million.

Fintech giant Ant Financial, whose virtual credit card Huabei reportedly has more than 100 million users, is also planning to IPO – though its plans have been delayed several times, as it needs to secure regulatory approval from Beijing.

Converted currency from Chinese yuan. Rate: US$1 = RMB 6.61.