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An Alibaba-backed fintech company founded by a 34-year-old just had an amazing IPO
Kerry Gao
Qudian, an online small credit provider, went public on the New York Stock Exchange.
The company, which was founded by a 34-year-old named Min Luo, is going after a market it says China's biggest banks can't serve.
Stock of Qudian, an online small credit provider, popped more than 43% after the company went public on the New York Stock Exchange on Wednesday morning, opening at $24 a share.
The China-based company, which was founded by a 34-year-old named Min Luo, targets China's younger and underserved markets with small loans via its mobile app.
The stock jumped to a high of $34 a share Wednesday morning before falling back to $30 at the time of publication.
Qudian, according to its prospectus, offered 37.5 million shares. Reuters reported that the company raised $900 million from the initial public offering, making it one of the largest IPOs of a Chinese company in the US this year.
The company counts Alibaba, the Chinese e-commerce and technology company also listed on the New York Stock Exchange, as a backer.
Carl Yeung, the company's chief financial officer, told Business Insider the firm was going after a market the country's traditional banks couldn't serve. Yeung said reaching the hundreds of millions of Chinese people with modest incomes is too expensive for larger financial-services players. Qudian is using nascent technology to capture that market.
"We are looking to use behavioral data, more and more data, to discover business opportunities," Yeung said. "We are tracking the cutting-edge data with artificial intelligence to see who has a high willingness to repay."
With such technology, the company is able to offer folks higher credit limits and earn a larger margin.
Qudian, according to a press release, "facilitated $5.6 billion in transactions" to 7 million customers in the first half of the year.
Chinese fintech is red-hot
Qudian's strong IPO illustrates the red-hot market for fintech in China. Some of the world's largest privately owned financial technology companies are based in China, including Lu.com, a Shanghai-based personal finance company, valued at $18.5 billion, according to CB Insights.
A recent study by the consultancy EY found that one in three digital consumers used two or more fintech products. This level, according to EY, indicates that fintech has crossed the threshold of early mass adoption. The firm said adoption was being driven by emerging markets, such as China.
"FinTech adoption by digitally active consumers in Brazil, China, India, Mexico and South Africa average 46%, considerably higher than the global average," the report said. "From an individual market perspective, China and India have the highest adoption rates at 69% and 52% respectively."
The firm said emerging markets were more open to fintech disruption because of the large populations of people who are underserved by existing financial infrastructures. Here's EY:
"Our five emerging markets are characterized by having growing economies and a rapidly expanding middle class, but without traditional financial infrastructure to support demand. Relatively high proportions of the populations are underserved by existing financial services providers, while falling prices for smartphones and broadband services have increased the digitally active population that FinTechs target."
Yeung said this environment would open the door to many multibillion-dollar financial technology companies in China. He hopes Qudian will be among them.
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