An Important Step for JD Capital: Marching towards Banking Business
2015-05-01
JD’s enterprising strategy aiming at banking sector
On April 29, JD Capital announced its plan to establish a private-owned bank with JD Capital as the main initiator, and hence a task force would be put in charge of all the preparatory work.
According to the announcement, private banks will face golden opportunities and bright prospects since Beijing is encouraging the inflow of non-governmental capital into financial sectors and the establishment of private banks that operate at their own risk. Therefore, by initiating a private bank, JD Capital will get a rare chance for further development.
JD Capital indicated that the move echoes Beijing’s latest initiative to deepen mechanism reform and accelerate an innovation-driven strategy for development. It is a pioneering effort by a private equity investment firm to explore new ways of financing service and to combine loaning and venture capital funding.
“If the investment in the financial market proves a success, JD Capital will make inroads into the banking sector, which marks the company’s significant progress towards becoming a comprehensive asset management insititution,” said a JD Capital staff member, “In addition, the establishment of a private bank will contribute to better resource allocation and higher capital returns.”
It is said that JD Capital, a well-known Chinese private equity investment firm, was listed on the NEEQ in April 2014. According to its 2014 annual report, JD Capital managed RMB funds valuing 31 billion yuan, with an Internal Rate of Return (IRR) of over 30%. By April 2015, 45 of the enterprises JD Capital invested in had entered domestic and overseas capital markets. Aiming to grow into a large asset management platform, JD Capital moved its strategic planning into top gear after its flotation on the NEEQ. It established its first public PE fund, known as JT Asset Management, gained a brokerage license, and became a shareholder in JZ Securities. Aside from the complementary interaction among different businesses, JD’s ambition was also reflected in its efforts to meet asset management requirements by different investors.
JD Capital’s drive for banking qualification brings a great many new possibilities to the capital industry. As to how to operate and manage the private bank in the future, a JD Capital staff member said, “Before a specific action plan, JD Capital will put a task force in charge of approaching competent authorities about the bank’s establishment and contacting and deciding on its co-founders. After the due process of internal decision making, application materials will be submitted to banking regulators. Other information shall be kept as business secrets.”
According to internal sources, JD Capital intended to apply Internet technology to financing service, and the previous acquisition of a cloud technology company and a third-party payment license is part of the strategy. Its major scope of business is expected to cover financing service, Internet financing service and asset management. This happy marriage between asset management corporations and the Internet is bound to usher in a brand new business mode.