The first financial technology subsidiary of a major state-owned bank plans to bring in external shareholders through capital increases!

According to information from the Beijing Stock Exchange, the capital increase project of Jianxin Fintech Co., Ltd. (“Jianxin Financial Technology” for short), a subsidiary of CCB, was recently launched. According to the announcement, Jianxin Financial Technology hopes to introduce no more than 5 investors, and the shareholding ratio of the new shareholders after the capital increase will not exceed 10%.

This is rare among banks and fintech subsidiaries. Previously, only Societe Generale Digital Finance, a subsidiary of Industrial Bank, had shareholders from 3 external institutions, and all of the shares held by external shareholders were purchased in September last year; the rest of the banking fintech subsidiaries were generally fully funded by the parent bank.

Furthermore, the current capital increase of Jianxin Financial Technology has also set a high threshold for intended investors. Not only does it place requirements on its comprehensive strength, investment quotations, and shareholding ratio, investors have not yet enjoyed a seat on the board of directors or supervisory boards of Jianxin Financial Technology.

Up to now, the number of established banking and fintech subsidiaries has exceeded 10. Among them, the Agricultural Bank and Finance Department, a subsidiary of the Agricultural Bank, was registered and established on the 28th. In addition, many banks, such as the Bank of Communications, Guangfa Bank, and Zhongyuan Bank, are also planning to set up technology subsidiaries.

First major bank fintech subsidiary to increase capital

According to information, Jianxin Jinke is a wholly-owned subsidiary of CCB engaged in the fintech industry. It was completely transformed from 7 development centers and 1 R&D center directly under the CCB system. It opened in Shanghai in April 2018, and is the first fintech company established by a major state-owned bank.

Up to now, Jianxin Financial has a registered capital of 1.6 billion yuan, ranking first among banking fintech subsidiaries. According to the arrangement, the company hopes to introduce no more than 5 investors through this capital increase. After the capital increase is completed, the new investors will hold no more than 10% of the shares, and the original shareholders' shareholding ratio will not be less than 90%. Based on this calculation, the total share capital of Jianxin Financial Technology will not exceed 1,778 million shares after the capital increase.

Jianxin Financial Technology also set a requirement that the shareholding ratio corresponding to the investment amount proposed by the single investor for this capital increase is not less than 1%, not higher than 3%, and is quoted at no less than 100 million yuan per 1% of equity. This also means that the unit price of this capital increase is not low, and the company's valuation after the capital increase is not less than 10 billion yuan.

According to the announcement, the funds raised by Jianxin Financial Technology's current capital increase are mainly used to support business operations and strategic investment needs. The portion of the total capital raised exceeding the proposed new registered capital will be included in the capital reserve and shared by new and old shareholders.

Jianxin Financial Co., Ltd. also disclosed its recent operating performance in the capital increase project. In 2019, the company achieved operating income of 3,231 billion yuan, an increase of more than 470% over the previous year, but recorded a net loss of about 472 million yuan for the whole year, an increase of about 200 million yuan over 2018.

Meanwhile, in the first half of this year, the company achieved operating income of 1,266 million yuan and recorded a net loss of 175 million yuan. By the end of June, the company had total assets of about 2,525 million yuan and owners' equity of 689 million yuan.

In fact, Jianxin Financial Technology was also the first bank fintech subsidiary to bring in external shareholders through capital increases. Prior to that, the financial technology subsidiaries of established banks were basically wholly owned by the parent bank, making it easy for the parent bank to carry out unified management, with the primary function of serving the parent bank group.

At the time of establishment, Societe Generale Digital Financial, a fintech subsidiary of Industrial Bank, used external joint ventures and absolute control to make equity arrangements. The company's initial registered capital was 500 million yuan, of which Industrial Bank controlled 51% of the shares, Beiyuan Investment held 19% of the shares as an employee shareholding platform, and Xinzheng, Gaoweida, and Jinzheng Co., Ltd. each held 10% of the shares as strategic shareholders.

However, as of February of this year, Societe Generale Digital Finance has completed the repurchase of all shares held by three external shareholders, and completed capital reduction and business information changes in June of this year. Currently, the registered capital of Societe Generale Digital Capital has been reduced to 350 million yuan, of which Societe Generale holds 72.86% of its shares through Societe Generale Guoxin Asset Management and 27.14% of the shares held by Baiyuan Investment.

New shareholders will not enjoy the board of directors and supervisors for the time being

Although the profit indicators were not outstanding, Jianxin Financial Technology still set a high unit price and entry threshold for intended investors in this capital increase project. Specifically, it includes:

First, after the capital increase, the composition of the board of directors and the board of supervisors of Jianxin Financial Technology remained unchanged. In other words, the new shareholders will not enjoy seats on the board of directors or the board of supervisors for the time being;

Second, the intended investor must be a domestic corporation registered and existing in China, with net assets not less than 3 billion yuan, or the net assets of its controlling shareholders not less than 40 billion yuan;

Third, there is no substantial competitive relationship between the main business of the intended investor or actual controller and the main business of Jianxin Financial Technology;

Fourth, intended investors are not allowed to use non-owned funds such as fiduciary (managed) funds, debt funds, etc. to participate in this capital increase, and the proposed investment amount is not higher than their net assets;

Fifth, the capital increase project does not accept investors' requirements on performance betting, equity repurchases, anti-dilution clauses, and one-vote veto, etc., and does not accept substitute investments, commissioned investments, or joint investments.

However, after the release period of information on capital increases expires in mid-September and it is confirmed that the intended investors are eligible to invest, Jianxin Financial Technology has the right to decide whether to initiate the selection process for investors and select all interested investors through competitive negotiations. In addition to the comprehensive strength of investors and investment quotations, the selection criteria are:

1. Intended investors or actual controllers are preferred by national financial infrastructure construction or policy financial institutions;

2. The business synergy and complementarity between the intended investors or actual controllers and the strategic development of CCB and CCB can introduce strategic business resources such as core technology, scenario ecology, and key data to support strategic development. Priority is given to strategic cooperation agreements signed with CCB or CCB;

3. Intended investors fully recognize Jianxin Financial's strategic positioning and development philosophy, and actively support Jianxin Financial Technology's priority of continuous management and innovative development concepts based on technological engines.