After notable investment deals last week kick-started a year of greater promise for fintech funding, this week is already following suit.
New investment in FundPark comes after it generated an initial US$250m in 2022, a fundraising endeavour that was also led by Goldman Sachs.
The extension therefore brings total investment in FundPark to US$500m, according to its COO Hay Yip.
Per the agreement, the loan has a three-year duration and will be collateralised by FundPark’s cash flow, the inventory of its customers and receivables, Yip adds.
FundPark investment: A bright spot for private credit lending in China
With its new capital banked, FundPark aims to provide its existing clients in China with additional financing. The fintech’s customer base consists of cross-border ecommerce SMEs, that – with access to more funding themselves – will be able to scale up their international trade capabilities.
Investment in FundPark represents a rare move from Goldman Sachs to back, rather than pull out of China’s private lending market.
China is currently in the midst of an unprecedented property debt crisis, which, in large part, has led to many investors reducing exposure or pulling out of the Asian country altogether.
Goldman Sachs’ move could well be a bold one. In backing FundPark, a signal is sent to international firms seeking access to what is still the world’s second-largest economy, that there are investment opportunities to be had.
According to Bloomberg, international private credit investors are pivoting their focus in areas of China’s economy with the best growth potential, chiefly the digital, data and consumer sectors.
In addition, ecommerce has significant growth potential with the success of Alibaba Group and PDD Holdings (which combined may account for over half of China’s retail growth in 2024 (Bloomberg Insights)), attracting more businesses to scale up their efforts in the space.
So, it seems additional investment in private credit investors like FundPark could give scope for renewed funding in various sectors of China’s economy, despite the current property debt crisis.
FundPark COO Yip says Goldman Sachs’ investment represents “exposure to growth and opportunity in Greater China’s new economy sectors, particularly digital small and medium enterprises which have historically been under-banked.”