news

Another payment institution has signaled its intention to go public.

On August 12, a Beijing Business Daily reporter noticed that Modern Financial Holdings (Chengdu) Co., Ltd. (hereinafter referred to as "Modern Payment") recently released the company's fourth five-year plan outlook, which mentioned that "starting today, Modern Payment officially launches its IPO plan."

However, some analysts pointed out that payment IPOs are not easy nowadays. After announcing the launch of its listing plan in a high-profile manner, Modern Payment also needs to evaluate the market impact if it fails to meet expectations.

Modern Payment Launches IPO Plan

"From today on, Modern Payment officially launches its IPO plan and aims to complete its listing goal within five years." This is the high-profile "official announcement" made by Modern Payment regarding the company's development plan for the next five years.

In the plan, Modern Payment also mentioned that the company's core team will enjoy equity/option incentives based on their contributions and share the dividends of the company's rapid development. At the same time, in order to promote the company's listing goal as soon as possible, the group plans to invest 500 million yuan in special funds to further accelerate the company's transformation and upgrading.

According to the official website of Modern Payment and the official website of the People's Bank of China, Modern Payment was established in 2010 and is a wholly-owned subsidiary of Modern Financial Holdings with a registered capital of 100 million yuan. In December 2011, Modern Payment obtained a payment business license issued by the People's Bank of China. The initial business license was for Internet payment and bank card acquiring services nationwide. When the payment license was renewed for the first time in 2016, Modern Payment's bank card acquiring services were prohibited from operating in Jilin Province and Qingdao City.

With the implementation of the new regulations, the types of licenses for payment institutions have also changed. On August 1, 2024, Modern Payment will reissue a new payment business license, and the business types will be divided into Class I for stored value account operations and Class I for payment transaction processing (except Jilin Province and Qingdao City).

Compared with the new payment regulations, Modern Payment needs to improve its name and registered capital more quickly than the listing process. According to the requirements, not only does it need to add the word "payment" to the company name, but based on the company's payment business type and operating geographical scope, Modern Payment's registered capital also needs to be significantly increased.

Beijing Business Daily reporters interviewed Modern Payment regarding the main reasons for the company's listing plan, the progress of its name change and capital increase, etc., but no response was received as of press time.

Regarding the listing plan proposed by Modern Payment, Wang Pengbo, a senior analyst in the financial industry at Broadcom Consulting, said that judging from the current development status of the payment industry, the market has entered a stable period, and the business models and products are relatively similar. It is necessary to put more effort and investment in technological improvement and meeting merchant needs in order to see results. Payment institutions are also facing huge competitive pressure.

"If Modern Payment wants to go public, it must first meet regulatory compliance requirements. Not only must it make adjustments to meet the new regulations, but it also needs to sort out whether there are any 'borderline' businesses internally, and promptly carry out cleanup and transformation actions. Performance is a reflection of hard power. Modern Payment must also meet the capital market's expectations for its performance, and continue to work hard on transaction scale, profit margins, etc." Wang Pengbo added.

Paying for an IPO is not easy

In addition to revealing the launch of the IPO plan, Modern Payment also pointed out in its plan that the company's business will be transformed and upgraded to a payment service provider, including AI-based smart business service providers, vertical industry SAAS solution providers, and cross-border payment expert system providers.

In recent years, the transformation into a payment service provider has become an important move for payment institutions in addition to their main business, and the main body of corporate business services has also shifted from the C-end to the B-end. In this process, on the one hand, the industry has broadened the scope of the company's business, and on the other hand, it has built a new payment ecosystem through digital initiatives.

In addition, from the actual feedback of the market, relevant financial institutions are also emphasizing their own "technological" attributes when going public. Su Xiaorui, a senior researcher at Suxi Zhiyan, pointed out that for modern payment, the difficulty of going public is that the overall IPO environment of the entire industry is tightening, and the supervision is more cautious in approval; secondly, the technological attributes of IPO institutions are more valued at present, but some institutions that are planning to go public still lack technological quality and their main business has no obvious highlights, which further hinders the listing process.

Since 2024, the IPO activities of payment companies have accelerated compared with the previous period. Lianlian Digital was first listed in Hong Kong this year, and then Fuyou Payment submitted its application to the Hong Kong Stock Exchange for the fourth time, but no new developments have been reported so far. Earlier, PingPong's operating entity Hangzhou Ping Pong Intelligent Technology Co., Ltd. planned to be listed on the Shenzhen Stock Exchange's Growth Enterprise Market, but there was also no follow-up progress.

Now, Modern Payment has also released a signal of seeking to go public. Su Xiaorui said frankly that in recent years, with the increasing maturity of the business model and the stabilization of profitability, the number of institutions with the intention of going public has also increased day by day. The announcement of the listing plan is conducive to motivating morale internally and enhancing market confidence externally, but payment IPOs are not easy nowadays. Institutions such as Fuyou Payment have encountered multiple rounds of regulatory inquiries, which has aroused heated discussions in the market.

"After the high-profile announcement of its IPO plan, Modern Payment also needs to evaluate the market impact if it fails to meet expectations," Su Xiaorui added.

However, in Wang Pengbo's view, the release of the new payment regulations has pointed out the direction of compliance development for the industry, especially the idea that the old and new classification methods will smoothly transition, will not change the scope of payment business licenses already obtained by payment institutions, and will not affect the business continuity of payment institutions and user experience, which further laid the foundation for the continued stable development of the industry. This has brought confidence in the stable development of payment institutions, and may also drive the growth of the expected listing of practitioners, and the pace will be accelerated accordingly.

Beijing Business Daily reporter Liao Meng