The 5 billion consumer finance license "changes hands," Liu Qiangdong takes action to "recruit new members"

The highly "valuable" consumer finance license in the industry has ultimately landed in the hands of the internet giant JD.com.

On December 20th, Tianjin Bank, which is listed on the Hong Kong Stock Exchange, announced its involvement in the restructuring of Home Credit Consumer Finance Co., Ltd. and the related equity changes.

With the release of this announcement, the equity battle for the "consumer finance giant" Home Credit, which was previously under foreign institutions, has also "come to an end."

At the same time, Liu Qiangdong has secured a consumer finance license.

1. Home Credit's equity settled

The announcement from Tianjin Bank indicates that the company participated in the restructuring of Home Credit Consumer Finance. It ultimately acquired a 10% stake by investing 500 million yuan.

After this round of equity restructuring is completed, the investment amounts and shareholding ratios of each shareholder are as follows:

Jingdong Trading invested 2.5 billion yuan, holding a 50% stake; Online Banking invested 750 million yuan, holding a 15% stake; China Foreign Trade Trust invested 600 million yuan, holding a 12% stake; Tianjin Economic and Technological Development Zone State-owned Assets Investment Co., Ltd. invested 550 million yuan, holding an 11% stake; Tianjin Bank invested 500 million yuan, holding a 10% stake; "Home Credit N.V." holds a 2% stake.

Among them, Jingdong Trading and Online Banking are both subsidiaries of JD Group. Once this restructuring is completed, JD's institutions will ultimately hold a total of 65% of Home Credit's equity.

2. First capital reduction, then capital increase

Additionally, according to the announcement, the restructuring of Home Credit adopts a method of first reducing capital and then increasing capital.

This means that the registered capital of Home Credit will first undergo a capital reduction process, during which the registered capital will decrease, and the original major shareholder Home Credit N.V. (the existing shareholder of Home Credit) will not receive any reduction funds or any payments from the company during the capital reduction process.

Then, a capital increase process will take place. Specifically, new shareholders will be introduced, including Guangzhou Jingdong Trading Co., Ltd., Online Banking (Beijing) Business Service Co., Ltd., China Foreign Trade Trust Co., Ltd., Tianjin Economic and Technological Development Zone State-owned Assets Management Co., Ltd., and Tianjin Bank. After the capital increase, the registered capital will change to 5 billion yuan.

Home Credit will properly repay, restructure, or handle all of its financing liabilities, related party liabilities, and operational liabilities.

Furthermore, this consumer finance company was originally 100% owned by foreign shareholders. In this round of restructuring, as the foreign shareholding ratio decreases to 2%, the mainland institutions led by JD have become the main investors.

3. Consumer finance licenses have always been "valuable"

A consumer finance company refers to a non-bank financial institution that is approved by relevant departments of the State Council, established within the People's Republic of China, and does not accept public deposits, providing loans for consumption purposes to individual residents in China based on small and dispersed principles.

Due to the ability to operate nationwide, it has attracted the attention of various banks and non-bank institutions.

Currently, there are only 31 consumer finance licenses in the country. Among them, 11 provinces, municipalities, and regions do not have registered consumer finance companies Home Credit is a consumer finance company fully owned by the overseas Home Credit Group. The latter is a globally renowned consumer finance company with operations in multiple countries. Home Credit Consumer Finance was established in 2010 and is one of the first pilot companies in consumer finance. Before the equity restructuring, Home Credit Consumer Finance was wholly owned by Home Credit N.V.

In the past, Home Credit's capital scale and profitability ranked at the top of the entire industry. In 2019, Home Credit Group submitted a listing application to the Hong Kong Stock Exchange.

However, with the rapid development of the digital economy, online consumer finance platforms have quickly emerged, posing significant challenges to Home Credit Consumer Finance's traditional offline business model. At the same time, regulatory agencies have continuously strengthened their regulatory policies on the consumer finance industry, imposing stricter requirements on Home Credit Consumer Finance's compliance operations. Home Credit Consumer Finance has gradually faced challenges.

According to an announcement from BANK OF TIANJIN, in 2023, Home Credit Consumer Finance Company encountered significant financial losses, with a post-tax loss amounting to RMB 3.199 billion.

With the involvement of JD.com, a major internet company, Home Credit may have found a new path for development.

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