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Startups

Chinese trade services startup XTransfer reaches unicorn status

Company founded by Ant Group veterans raises $138m to expand reach

XTransfer is on track to more than double its staffing this year. 

HAIKOU, China -- XTransfer, a trade services startup founded by veterans of Ant Group, has raised $138 million in a fundraising round that valued the four-year old company at over $1 billion.

U.S. investment group D1 Capital Partners, best known for backing online brokerage Robinhood, led the Series D round, alongside existing shareholders.

Self-described as "PayPal for cross-border trade," Shanghai-based XTransfer provides currency and payment management services to over 150,000 small and mid-sized companies importers and exporters, mostly in China.

XTransfer, which says it has been profitable since April 2020, said it will use the new funding to invest in big data and artificial intelligence, bolster its anti-money laundering risk management system and recruit global talent for overseas expansion.

"Our plan is to serve SMEs from around the world, starting with Southeast Asia where we have already established a foothold," XTransfer Chief Executive Bill Deng told Nikkei Asia. "We will keep promoting the digitization of exports and aid the sector's digital transformation."

XTransfer has added 400 staff since the start of the year, taking its workforce above 1,000. It expects to reach 1,300 by year-end. Deng previously said the company would look to expand into the Philippines, Indonesia, Thailand and Vietnam from its office in Singapore.

"We believe XTransfer's services are a critically needed addition to the global trade finance ecosystem," said Ray Bao, a Hong Kong-based partner at D1 Capital. "In the next decade, we expect they will be able to serve SMEs from around the world and will be an important financial infrastructure company in global cross-border trade."

D1 focuses mostly on listed companies. It holds positions in JD.com and many Chinese technology companies that have recently listed in New York, including Full Truck Alliance, Kanzhun, Futu Holdings, KE Holdings, Tuya and Waterdrop, according to its second-quarter filing with the U.S. Securities and Exchange Commission.

Its filing for the first quarter also included a holding of 25.03 million shares in New Oriental Education & Technology, a tutoring company badly hit by China's crackdown on private educational services. The company's share price has fallen 90% since peaking in mid-February.

XTransfer's other investors include the venture arms of Australian telecommunications operator Telstra and Chinese state conglomerate China Merchants Group; the eWTP Capital fund backed by Ant and Alibaba Group Holding; and Hong Kong and China funds Yunqi Partners, MindWorks Ventures, 01 Venture Capital, Lavender Hill Capital Partners and Gaorong Capital.

Asia-Pacific financial technology investment and deals activity rebounded in the first half of 2021, driven in large part by venture capital rounds, KPMG said in a report last month.

Some $7.5 billion in 467 investment deals was recorded, up from $4.7 billion across 357 deals in the same period last year. China accounted for $1.3 billion in fintech deals, behind India's $2 billion.

"Fintech is an incredibly hot area of investment right now, and that is not expected to change any time soon given the increasing number of fintech hubs attracting investments and growing deal sizes and valuations," said Anton Ruddenklao, KPMG's global fintech co-lead.

XTransfer's new funding comes as China's exports beat market expectations by surging 33.7% in dollar terms over the first eight months of the year compared with the same period of 2020. SMEs have been a key part of this, according to Wei Jianguo, deputy director at China Center for International Economic Exchanges.

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