PAG and LexinFintech have entered into a convertible note purchase agreement where the Asia-focused PE firm will acquire through a private placement $300-million worth of convertible notes from the Chinese firm.
The convertible notes will mature in seven years and bear interest at a rate of 2 per cent per annum. According to LexinFintech, the notes will be convertible into fully paid Class A ordinary shares at a conversion price of $14 per ADS from the six months after the issuance date.
PAG will have the right to require LexinFintech to repurchase for cash all or any portion of the notes on the fourth anniversary of the issuance date.
The investment will enable LexinFintech to further develop and enhance its consumption-based ecosystem, improve product offerings to its educated adult customers, continue to invest in technology, build up additional consumption scenarios, and provide more consumer benefits to customers, the company said.
Founded in 2013, LexinFintech’s total number of registered users reached 50.2 million as of June 30, 2019, representing an increase of 71.7 per cent from 29.2 million as of June 30, 2018. Users with credit line reached 13.5 million as of June 30, 2019, up by 50.7 per cent from 8.9 million as of June 30, 2018.
The firm focuses on serving the credit needs of educated young adults aged between 18 and 36 in China, especially young people with high-income potential, high educational background, high consumption needs, a strong desire to build their credit profile, and an appreciation for efficient user experience.
“Our online consumer finance platform, Fenqile, addresses our users’ credit needs by offering personal installment loans, installment purchase loans, and other loan products,” the firm said.
In the second quarter of this year, total operating revenue reached 2.5 billion yuan ($353 million). Financial services income reached 1.5 billion yuan ($212 million), representing an increase of 8.1 per cent from the second quarter of 2018.
Loan facilitation and servicing fees in financial services income reached 1.2 billion yuan ($169 million), representing an increase of 148 per cent from the second quarter of 2018, the company said.
PAG, meanwhile, currently manages more than $30 billion in capital for some of the world’s largest institutional investors in North America, Europe, Asia, and the Middle East.
Its private equity funds focus on investing across the financial services, consumer, healthcare, business products, and technology, media & entertainment sectors.
PAG is a leading investor in the financial services industry, with a portfolio of investments including Herald Pacific Leasing, Dashu Finance, and Samoyed Financial.