CEO & PRESIDENT INTERVIEW: Pintec's Top Executives on Overseas Expansion, Market Volatility, and Competition
The Chinese financial services provider closed up 5 percent on its debut today on Nasdaq.
On its debut day on Wall Street Thursday, Chinese financial services provider Pintec Technology Holdings Ltd. (Nasdaq: PT) enjoyed a positive ride today, raising $44 million in its IPO and closing up 5 percent, at $12.49 per American depositary share.
Initially priced at $11.88 apiece, shares in the company opened at just below $15 and wavered in the green throughout the day before ending up 61 cents. But Pintec's top management said the short-term market volatility did not worry them.
(Source: Thomson Reuters Eikon)
"It's pretty exciting that giving this situation, our IPO is still successful, and we made this happen," William Wei, the chief executive officer and founder of Pintec, said in an interview with CapitalWatch. He added that the stock price doesn't matter as much as the fact of trading publicly in New York, as it adds significant company credibility, and that's what Pintec sought in its offering.
In fact, a number of Pintec's existing shareholders and their affiliates offered to acquire as much as 77 percent of the 3.7 million ADSs sold in the IPO.
Since Pintec's inception in 2016, when it was spun off from a peer-to-peer lending firm, the company has been growing fast. On its platform, which uses cloud computing, big data analytics, and artificial intelligence technology, Pintec connects businesses and financial partners to facilitate loans to borrowers and provides wealth management solutions. In June, it had approximately 25.1 million registered users for its point-of-sale financing and personal and business installment loan solutions.
This year, the Beijing-based company's fortunes turned to a profit, reporting income of $4.6 million for the six months through June, in contrast to a loss of $8.5 million a year ago. Its revenue during the period reached $60.4 million, up 69 percent year-over-year.
Pintec has also been expanding outside China, targeting overseas financial services markets. A year ago, it formed a joint venture, PIVOT Fintech Pte. Ltd., together with FWD Group and other investors, to provide robo-advisory services in Southeast Asia. In April this year, Pintec formed Avatec.ai(S) Pte. Ltd. in a partnership with United Overseas Bank Ltd. to offer credit services and solutions in the region.
After Pintec lifted off on Nasdaq Thursday, William Wei and the company's president, Jing Zhou, talked to CapitalWatch about the company's next steps, its take on China's lending industry, and the significance of competition in the market.
CapitalWatch: Now that Pintec has become a public company, how do you feel?
William Wei: This is a good starting point. We already got recognized by the most active capital markets and the regulations auditing, so I am quite excited now.
In the future, we want to ensure continuous innovation and continuous optimization of our solutions and products that must be fit for market and lead to long-term development. We need to make sure the company is always moving in the right direction.
CW: What was the biggest challenge the company had to overcome to get to where you are today?
Jing Zhou: The company is very young, less than 3 years. And the market has been very volatile.
When we started the journey, there were a lot of competitors in the market. We had to focus on our core strategy, to keep a stable team, and to continue to deliver. In the B2B market, especially as a small company, how do you gain trust? Forming long-term partnerships with businesses and financial institutions was not easy.
But on the way, we got a lot of support from the team, from the investors, from our partners – just to get to where we are today. The market might be volatile, the regulations might go up and down, but, as a team, so far, we have been able to overcome, and we will continue to do that when facing obstacles.
CW: This year, P2P lenders have been experiencing some difficulties in China. At some point, Pintec transitioned from peer-to-peer lending to offering various financial services. Did you see something in the industry that led to this transition?
William Wei: We started from a team which is currently a peer-to-peer lending platform and we spun off in 2016. At that moment, we decided to build a new company focusing on providing solutions to enable our financial and business partners to be more successful in the FinTech area. Since then, we grew even faster than some other financial partners.
As to the peer-to-peer lending area – that industry is always quite noisy, so it's nothing new that this year they are facing some challenges. We believe that good companies can always bring value to both society and the shareholders. The stricter regulations for the peer-to-peer lending industry is good because it can block some weak or bad players that make the whole industry quite volatile. I can see many promising points in this year's regulation changes. And I'm pretty sure that China's regulatory policies are changing in the right direction. So, let's see how the market can recover and start in a more healthy way very soon.
CW: Tell us a bit about your competition. In your prospectus, you mention Baidu Finance, Ant Financial, and Webank as your rivals. Given the crowded market, what problem does the company solve that other financial services in China do not?
William Wei: Firstly, we are not an ecosystem builder, so we are not like Ant Financial.
When they started, they had very strong resources inherited from [parent company] Alibaba Group. But we put more efforts to make solution-like services. And we put quite a lot of efforts into our products and we make sure they can be easily integrated and customized and made fit for all kinds of environments among different financial partners and business partners, and even among different countries. This has been the initial strategy for Pintec and now we have been running in this direction for more than two years.
And now it's the time to prove, to show the results, and we did achieve a lot in this area. I think competition is always a good and bad thing. Competition means you are going in the right direction. If you are in the wrong direction, there's actually no competition, and there is not a future either.
One has to design a growth strategy in a better and smarter way. At Pintec, we focus on two important areas. The first is the product. You have to make your product be fit for different customers and different environments. The second one is international markets. You have to make sure that your solutions can work not only in China but that you can meet all other developing countries' requirements.
And now we're in a good position in this area, and especially in the last several quarters, we had some huge achievements in this area.
CW: Tell us about Pintec's plans for the IPO funds. Will we see more international expansion in the near future with the proceeds of the stock sale?
Jing Zhou: Basically, business expansion [is in our plans]. Our solutions are market-leading and can be catered for the international market and we will continue to invest to expand internationally. And that's one of our core strategies going forward.
International expansion, as well as investing in talent and in technology will help us stay ahead of the game. Certainly, [we plan to get] the necessary licensing in order to be compliant and to offer some products that require licensing.
William Wei: As a technology company, we will keep investing in technologies, recruit experts, and invest in the digital lab to make sure we can have a continuous and lasting innovation. We may invest in some financial institutions, specifically, in a micro-lending company, just to make sure that for our business incubation and for our business innovation we can have a platform and a starting point.
CW: What led Pintec to seek to go public now, when some existing investors in the company offered to fund nearly 80 percent of the offering?
William Wei: In the business practice of FinTech solutions, our branding and the level of the company are always key factors for our business partners to choose us as a solution provider.
To be listed as a public company can help us to win a better position in these partnerships. Actually, that was a major trigger and the reason why we started the IPO process.
Our existing shareholders and some of our partners – they have a strong will to keep investing in this company, so that's why you see a big portion of the IPO done by these institutions. We do appreciate their support, but at the same time, winning a better position in branding and gaining more trust and loyalty in our partnerships is extremely important for us.
CW: This has been a tough week for stock markets. Many tech companies saw their shares drop significantly, and this is the second time in October that Wall Street experienced this big decline. And in part, this is related to the U.S.-China trade war that's only been intensifying. Do you feel that the company's IPO, or its business, have felt any effect from this worsening relationship between the economies?
William Wei: I did see the volatile status in the capital markets in the U.S. these past weeks, but this is something we cannot control. It's pretty exciting that, given this situation, our IPO is still successful and we made this happen. So, I do appreciate the support from the banks and the team's support.
In the long run, we won't put much focus on the performance of the stock price. Because if you want to build a long-term successful company, the short-term stock price change doesn't mean anything. We will put more efforts on the business side – make better solutions and satisfy our customers. If you create long-term value, your shareholders will get the benefits.
Jing Zhou: I might add a little bit. We are conscious of these conflicts, but because our business is in China and in Southeast Asia and other regions of the world, it hasn't impacted our business. But we constantly monitor the situation.
As William has said, we feel very fortunate to be here today. The short-term volatility of the market will always be there and we are conscious of that, but we really believe in the long-term value and strategy and eventually will make good returns to our investors.