WeLab Strikes $260M Financing Deal with Citigroup Amid Expanding Digital Banking Landscape

by Nik Asti

Published: October 30, 2023 at 12:43 am Updated: October 30, 2023 at 12:43 am

by Victor Dey

Edited and fact-checked:

In Brief

Citibank Grants $260 Million in Asset Financing to Hong Kong’s WeLab Virtual Bank.

WeLab Strikes $260M Financing Deal with Citigroup Amid Expanding Digital Banking Landscape

Hong Kong’s leading online lending platform, WeLab, recently secured a landmark asset financing deal worth $260 million, courtesy of Citigroup. While both entities remain tight-lipped about the transaction details, sources intimate with the agreement have hinted at Citigroup playing the sole senior underwriter’s role.

Speculations surrounding this deal aren’t new, as reports from Foresight News last November alluded to a funding move that could potentially peg WeLab’s valuation close to $2 billion.

The Rise of Virtual Banking in Hong Kong

This move underscores the growing influence and trust in virtual banks. WeLab, a notable name in this domain, operates from the Hong Kong Cyberport and proudly stands as a founding member of the Hong Kong Web3.0 Association.

Global banking giants like Citigroup continue to recognize the potential in digital lending platforms like WeLab. The motivation for such deals goes beyond mere financial transactions. In the wake of successive rate hikes impacting the traditional loan growth, banks are now aiming to diversify their funding strategies and safeguard against credit risks.

The prevailing financial environment is encouraging companies to opt for borrowing against their high-quality assets. This approach stands in contrast to the more conventional route of issuing unsecured debt. It’s a win-win for banks as they can amass various debt forms, repackage them, and present these attractive investment options to their clientele.

WeLab’s Growing Footprint in Online Lending

WeLab’s recent performance provides some context to Citigroup’s interest. The firm’s loan growth this year has toppled even its pre-pandemic figures. Strategic partnerships with global corporations such as Tesla and Apple have significantly bolstered its position.

With a backing from prominent investors like Sequoia Capital and business magnate Li Ka-shing, WeLab boasts a staggering 37% YoY loan growth. Notably, its market dominance is evident, holding nearly 90% of Tesla’s car loan share in Hong Kong. Additionally, Apple trusts WeLab exclusively for its subscription program’s financial services in Asia.

The broader Asian credit landscape, however, paints a tumultuous picture. The unfolding crisis in China‘s credit sector, marked by events like the default of Country Garden Holdings Co. on its dollar bond and the ongoing struggles of China Evergrande Group, contrasts the success stories of firms like WeLab.

Yet, WeLab’s journey since its 2013 inception showcases its resilience and strategic prowess. Having disbursed loans worth more than $13 billion, its reach spans across Asia, serving over 60 million users and catering to 700+ enterprise customers scattered from Hong Kong and China to Indonesia and Malaysia.

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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master’s degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

Nik Asti