Tencent Holdings is a huge investment holding company that has recently ventured into financing through WeBank. (Photo : Reuters)
WeBank, an online banking affiliate of Chinese Internet giant Tencent Holdings Ltd., is eyeing to raise $1 billion in a bid to beef up its financial services offering, according to the people familiar with the matter.
Thirty percent owned by Tencent, the firm is currently in talks with outside investors for a fundraising round which will increase its value to $5 billion.
The first since WeBank began its operations in January, the fundraising effort is expected to expand the firm's offering of small loans and investment products.
The people familiar with the move also revealed that Bank of America's Merrill Lynch is working with the firm on the said fundraising scheme.
WeBank makes small loans with funds from conventional financial institutions such as The Bank of East Asia Ltd. and Hua Xia Bank Co.
Though Tencent is eyeing for a larger share in the online bank, regulations limit the company's ownership at 30 percent.
Other WeBank shareholders include Shenzhen Liye Group and Shenzhen Baiyeyuan Investment, each with a 20-percent share.
In the country, online banking has been a new front in the competition among Chinese Internet firms. Leading giants such as Tencent and Alibaba are doubling their efforts to offer small loans and other investment products through their online avenues.
Experts are predicting the online banks will quickly grow, though this may be hampered by regulators seeking to cap off the risks in China's financial system.
Nonetheless, apart from online banking platforms, Chinese Internet companies are also foraying into other financial services like payments and insurance.
