AMTD Group, the Hong Kong-headquartered financial services firm, is looking to list a subsidiary that invests in fintech companies, in order to create an exchange-based instrument that provides exposure to an array of technology-related plays. The firm has not yet determined a venue, however, says Calvin Choi, chairman and president.
The unit to be listed consists of AMTD’s proprietary investment arm, which is dedicated to fintech. Internally it is called AMTD Strategic Capital, although it is not yet decided under what name it would take if the business seeks a listing.
AMTD is also a shareholder in the $1 billion China Fintech Fund, which is backed by L.R. Capital and China Minsheng Investment Group, both of which are shareholders in AMTD.
AMTD hopes to complete a listing in the first half of 2018, Choi says, declining to quantify the amount to be raised. The proceeds are meant to bolster AMTD’s own path to digitalization, as well as to bolster a chain of companies and services throughout Asia’s growing fintech landscape – including helping Chinese technology companies expand to Southeast Asia.
The China Fintech Fund was the lead investor, along with Standard Chartered Bank, in last year’s C-round of financing of Dianrong, the Chinese peer-to-peer lender. AMTD has also backed FinEx Asia, a startup launched by banker Maggie Ng connecting Asian investors with loans from U.S. online marketplaces; and Fox Financial Technology Group, the fintech arm of Chinese internet portal Sohu.com.
“We want to involve the entire value chain,” Choi told DigFin, noting that a listed vehicle will enable institutional investors and financial firms to get access to a liquid, transparent instrument that would have exposure across all aspects of financial technology.
It’s the investors who make this a market
The portfolio would include plays in artificial intelligence, blockchain, digital payments, and other fintech tools – and it would offer a way to play the theme of digitizing industry, from trade finance to manufacturing to banking itself.
AMTD’s strategy is to leverage its investments by attracting broader institutional participation. “It’s the investors who make this a market,” Choi said.
An important signal for him was GIC’s participation in Dianrong’s D-Series capital raise, a deal in which AMTD served as Dianrong’s sole financial advisor. “This is a rare example of a sovereign wealth fund making a direct investment into a fintech company in emerging markets,” Choi said. AMTD Strategic Capital’s goal is to anchor longer-term investors, with a three- to five-year time horizon, through strategic plays in the future growth of internet finance.
The company wants to list its investment business in order to make it easier for pension funds, insurance company’s asset managers and sovereign wealth funds to access the Asia fintech story.
GIC is a rare example of a sovereign wealth fund making a direct investment into a fintech company in emerging markets
AMTD is also organizing events, such as the annual AMTD-Lendit Global Fintech Summit held in Hong Kong (of which DigFin is a media partner); and FINTalks, a fintech CEO roadshow it organizes in cities such as Taipei and Singapore in partnership with KMPG, local universities, and other banks. AMTD, along with some of its investee companies, has also backed a fintech research center at National Chengchi University in Taiwan.
For Choi, these activities are meant to support the institutionalization of fintech. “These things create awareness in the institutional community, and we need institutional investors in order to create a proper, orderly market” for technology companies and their financial users.
Where's the growth?
The question of where to list AMTD Strategic Capital has yet to be settled, however. Hong Kong Exchange and Clearing would be the obvious venue for a Hong Kong company, but Choi says he is also looking at Nasdaq and Singapore Exchanges.
AMTD is looking at a slate of Chinese tech companies and trying to identify those with the managerial experience and proven business model to expand internationally – with Southeast Asia as the most likely destination. “It’s not about chasing a hot company, but identifying what markets will be the next growth engine,” Choi said.
Singapore is also now home to increasingly big tech companies. In July, transport startup Grab raised $2.5 billion, while Chinese online wealth manager Lufax secured a retail securities license there.