AmEx Chases E-Payments With Lianlian Link 美国运通联手中国连连集团

By newsdoug on January 19, 2012

AmEx joins hands with Lianlian It’s not often that I get to write about new initiatives by big foreign banks in China these days, so I’m taking this opportunity to take a quick look at a new and potentially intriguing deal involving American Express (NYSE: AXP) and Lianlian, a Chinese firm that helps mobile users add money to their accounts. Followers of big global banks like Citibank (NYSE: C), Bank of America (NYSE: BAC) and Royal Bank of Scotland (London: RBS) know that most of those names have spent the last few years trying to salvage their core operations at home, following the global financial crisis that saw most nearly driven to insolvency and only surviving with massive government bailouts. Against that backdrop, the only major activity we’ve seen from those banks in China in the last 3 years has been their sale of early stakes they took in China’s big 4 banks before they went public, with Bank of America and RBS both selling such stakes to raise cash. (previous post) Amid all the selling, American Express has been one of the few big foreign names to actually retain its share in a big Chinese bank, in this case holding on to a relatively small stake in ICBC (HKEx: 1398; Shanghai: 601398), China’s largest bank. Now AmEx says it is investing in Lianlian Group, a Chinese e-payments company founded in 2004 — making it a relatively mature 8 years old in this interesting and fast evolving space. (company announcement) AmEx isn’t saying how much it’s investing, and is careful to point out it has invested in an offshore unit of Lianlian, as China is still quite sensitive about direct foreign investments in the e-payments sector. The investment also looks like part of a broader tie-up that will see Lianlian use AmEx technology, specifically licensing an e-payment platform developed by the US financial services giant. I’ll admit this is the first time I’ve heard of Lianlian, which, according to the announcement, serves 300 million mobile users by offering services for them to add money to their accounts through a network of 300,000 agents across China. Those numbers are surely exaggerated somewhat, but even if the true figures are only half as big this certainly looks like a company to watch. Its combination of relatively long history, broad penetration and now this tie-up with AmEx seem to point to a name with strong prospects in a fast-growing area, with potential for an interesting IPO in the financial services space in the next 2 years.

Bottom line: E-payments firm Lianlian looks like a company to watch, following a new tie-up that includes a technology agreement and equity investment by American Express.

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