Tencent online fund balloons to 80 bln yuan in 75 days

May 07, 2014 09:07
Tencent has a lot to sing and dance about. Its Licaitong online financial product has 80 billion yuan in net asset value. Photo: Reuters

Licaitong, Tencent Holdings Ltd.'s (00700.HK) online financial product for WeChat users, has swollen to more than 80 billion yuan (US$12.85 billion) in net asset value in 75 days, the Hong Kong Economic Journal reported Wednesday, citing Lai Zhiming, manager of Tenpay, Tencent's third-party payment affiliate.

But it's not stopping there. The multimedia giant plans to launch financial services and products overseas and work with traditional lenders to start WeChat banking services, even though it's draining deposits from those banks.

The idea is to enable 355 million WeChat users to use their mobile phones to pay for products and services overseas in return for benefits like shopping coupons and privilege services, Lai said.

Licaitong is absorbing funds at the rate of about 727 million yuan a day, putting it on par with Yu'E Bao, a similar product backed by rival Alibaba Group Holding Ltd.

One Licaitong-linked fund called Caifubao and managed by China Asset Management Co. Ltd. grew by more than 76-fold in asset value in the first quarter.

Lai said that product risk is a major concern for Tencent in opening up its platform for mobile financial products and that measures are in place to ensure the safety of its users' money.

These measures include separation of users' investment funds and their outstanding balance in their payment accounts, and the issuance of a banking card solely fund purchases and redemptions.

But analysts said internet financial products may become less attractive as yields from banking deposit agreements fall.

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