eToro’s Chinese round of funding, fintech incubators and start up investments: Ping An Ventures Investment Director Lance Liu

Venture capital investment in FX companies has been almost de rigeur over the last two years, and although the astute and well-capitalized investors which view new innovations in electronic trading from cryptocurrency’s blockchain initiatives to social trading platforms worthy of support, the interest from large VC funds is part of a wider interest in the entire fintech sector.

Today, here at the FXIC Forex Industry Conference in Shanghai, China, Andrew Saks-McLeod, CEO of FinanceFeeds met with Shift Forex M&A Advisory Jacob Brichkin, and Lance Liu, Head of Investment at Chinese venture capital firm Ping An Ventures.

Ping An Ventures is a very large enterprise, which was established 25 years ago. At the beginning, the company’s core business was insurance, which it concentrated on for the first ten years. Since then, the company has built three pillars which are insurance, banking and investment and all the technology that backs financial services.

Now the technology aspect leads, and most people in the FX industry are familiar with the name Ping An Ventures as a result of the firm’s recent venture capital funding that it provided to social investment firm eToro.

Joining existing investors which include Russian financial institution Sperbank, Ping An Ventures provided a round of funding earlier this year, sparking speculation that eToro had its eyes on China.

FinanceFeeds asked Mr. Liu what the rationale was for such an investment on eToro, to which he replied “Our core business is investment in financial services firms, and there are many good business models overseas with good technology which China does not yet have. We have a large market to serve so we have a remit to invest in new technology and foreign business model and bring it into China.”

“eToro’s collaboration with us is on two fronts” said Mr. Liu. “One is a cooperation on the social investment side, whilst we also invested in the fintech side of their business.”

How will this be structured?

As part of the structure of the new venture that is currently being created, Mr. Liu explained “At this stage, we did not establish a joint venture model with eToro because we wanted to do a trial first. Sometimes we do joint venture and sometimes not, it depends on the business itself. This time we just cooperate on a commercial level.”

“eToro created a wholly owned foreign enterprise (WOFE) which is in the process of registration and is a fully owned subsidiary under eToro. The market here in China is less strict than it was before, and it is less hard to open in China as it had been previously, as long as there is government oversight and input.” – Lance Liu, Head of Investment, Ping An Ventures.

Jacob Brichkin then asked Mr. Liu whether Ping An had become more of a technology company than a financial services company these days, to which Mr. Liu replied “We are very much a fintech company so nowadays, the technology aspect of finance is our priority. There is a very large fintech incubator within Ping An Group. LUFAX (Lujia Zui Financial Asset Exhange) is a large enterprise that was started with investment from Ping An, and that company rose to become the largest B2B platform that now concentrates on asset securitization. I was also involved in the acquisition of the two payment companies in 2011. We injected our own management structure, and merged them into one company.”

“For example, with regard to peer to peer investing and lending, we are not only investing, but we also incubate companies in that sector” said Mr. Liu.

Mr. Brichkin asked where the future growth in China is, to which Mr. Liu said

“In China, the lower tier of the customers is underserved. The wealthy are well-served by wealth management companies or banks, yet the mass market remains underserved. Many people who make up the mass market want to invest in diverse products and overseas instruments including equities and stocks, but there have been less companies to serve that end of the market.” – Lance Liu, Head of Investment, Ping An Ventures.

“Healthcare is our next plan” enthused Mr. Liu, to which Mr. Brichkin concurred “This is a very big phenomenon nowadays, however it is very hard to invest in healthcare or life sciences. In those sectors, unlike in financial services or technology, you cannot trade off EBITDA as they don’t have it.”

Mr. Liu concluded. “That is true, both healthcare and life sciences are very hard to value. When investing in either sector, I would have to pursuade myself first, and mostly one has to follow the trend and gain the right conclusion to make an investment.”

Photograph: Andrew Saks-McLeod meets Lance Liu and Jacob Brichkin in Shanghai, China. Copyright Andrew Saks-McLeod