The B2B cross-border trade payment provider, often referred to as a 'unicorn', has officially submitted its application to the Hong Kong Stock Exchange for a main board listing, with UBS and CICC acting as joint sponsors.
According to its prospectus, the company plans to adopt a weighted voting rights (WVR) governance structure. Class A ordinary shares will carry 10 votes per share (except on reserved matters) and will be held solely by the company's founder, Chairman, and CEO, Deng Guobiao, through his wholly-owned entity, Wormhole Transfer. Class B ordinary shares will carry one vote per share and will be held by other investors. Furthermore, the founding team, forming a five-person concert party arrangement with Deng Guobiao at its core, collectively holds 41.89% of the shares. Combined with the Class A shares, the founding team controls over 90% of the company's voting rights. This structure ensures the founding team retains dominant control over long-term strategy and operational decisions post-listing, insulating the company from short-term capital market volatility.
As of March 31, 2026, the company had over 897,000 registered customers, representing the world's largest customer base of small and medium-sized enterprises (SMEs). Its primary services include payment processing, fund exchange, and transfer/withdrawal services. The company holds payment licenses in mainland China, Hong Kong, the UK, the US, Singapore, the Netherlands, Australia, and Canada, and partners with 171 financial institutions.
Profit Margins Over 90% Contrast with Sub-1% Monetization Rate
Financial data from the prospectus shows total revenue for the fiscal years 2023 to 2025 was $115 million, $162 million, and $248 million, respectively, representing a compound annual growth rate (CAGR) of 47.5%. Gross profit for the same periods was $110 million, $152 million, and $229 million, with the gross profit margin remaining above 90% for three consecutive years.
On the surface, this business model appears highly profitable. However, beneath this high-margin 'halo', the platform's monetization rate is extremely low and declining.
To encourage account openings and attract and retain SME clients, the company typically does not charge separately for its collection services. For services like fund exchange and transfers/withdrawals, it charges a service fee based on a percentage of the transaction value. From 2023 to 2025, the platform's total payment volume (TPV) surged from $18.633 billion to $60.516 billion, a CAGR of 80.2%. In contrast, its payment service revenue grew from $87.234 million to $208 million, a CAGR of approximately 54.4%, significantly lagging behind TPV growth. Consequently, the platform's monetization rate declined over the reporting period, from 0.47% to 0.40% and then to 0.34%.
This divergence between rapidly growing TPV and a falling monetization rate indicates a shrinking ability to convert each unit of transaction volume into actual revenue. The question arises: is this a strategic choice to sacrifice margins for customer acquisition, or a dangerous signal of eroding pricing power in a competitive market?
Furthermore, the company's high gross margin advantage is showing signs of strain. The gross margin for its payment services, which contributes over 80% of its performance, declined from 94.6% to 91.0% during the reporting period. This contributed to an overall company gross margin drop from 95.6% to 92.0%, a cumulative decline of 3.6 percentage points. Against the backdrop of integrated payment giants entering the B2B space and traditional banks accelerating their digital transformation, it remains uncertain whether the company can maintain its competitive moat.
Interest Income on Client Funds: A Significant but Risky Revenue Stream
If payment services represent the company's primary revenue line, then interest income on client funds represents a significant but potentially risky secondary line.
From 2023 to 2025, client funds held at banking and other financial institutions amounted to $868 million, $1.114 billion, and $2.109 billion, respectively. The interest income generated from these funds was approximately $26.728 million, $29.894 million, and $38.364 million, accounting for about 23.3%, 18.4%, and 15.4% of total revenue in each period. This makes it the company's second most important revenue source after payment services.
As disclosed in its client agreements, client funds refer to money temporarily held in a client's collection account on the platform, awaiting transfer, withdrawal, or further instruction. Clients are not entitled to the interest income generated from these accounts; the company retains the right to keep any interest earned on funds collected or held on behalf of clients. In essence, clients forgo the time value of their money, while the platform converts the advantage of fund float into a form of 'implicit income'.
However, while this revenue stream is substantial, its sustainability is questionable. On one hand, this income is highly dependent on the global interest rate environment. As a cross-border payment platform, the company cannot control macroeconomic interest rate trends, yet it ties a significant portion of its revenue to them, representing a structural vulnerability.
On the other hand, larger client fund balances lead to higher interest income, which can incentivize payment institutions to rely passively on this 'interest spread'. Consequently, regulatory scrutiny over the management of client funds by payment institutions is intensifying globally, with compliance thresholds rising. In mainland China, for example, regulations since 2019 require all payment institutions to place 100% of client funds in centralized custody with the People's Bank of China, which does not pay interest. As a cross-border payment platform, the company's client funds flow between accounts in different jurisdictions, exposing it to high policy uncertainty.
Assessing the Rationale Behind a 250-Fold Valuation Surge
The company's pre-IPO roster of institutional investors is impressive.
Within a month of its founding in 2017, it secured $2.95 million in seed funding from Gaorong Capital and Yunqi Partners, valuing the company at approximately $12 million post-money. Before 2021, the company completed a funding round almost every year, with its valuation climbing from $55 million to $311 million. Investors during this phase included existing shareholders as well as new ones like the Alibaba-affiliated eWTP Ecosystem Fund, Li Kaifu's 01VC, China Merchants Capital, Titanium Ventures (formerly Telstra Ventures), and Hong Kong-based VCs Concept Capital and Lavender Hill Capital.
In September 2021, the company completed its Series D round at $3.01 per share, raising $137.2 million and achieving a post-money valuation of $1.187 billion, officially entering 'unicorn' status. This represented a 281.7% increase from its valuation at the beginning of that year, within just eight months. The lead investor in this round was the new shareholder, hedge fund D1 Capital, which alone subscribed for 38.46 million shares, accounting for about 72.9% of the total Series D preferred shares.
However, this period of intense investor enthusiasm came to an abrupt halt, and the company entered a funding 'drought' lasting nearly four and a half years. It was not until February 2026 that the company completed its Series E financing. While the total transaction value was $69 million, only $20.31 million represented new capital injection, contributed by existing shareholders Gaorong Capital, Yunqi Partners, the eWTP Ecosystem Fund, Lavender Hill Capital, Titanium Ventures, and Concept Capital. The remainder was used to acquire shares from other existing shareholders.
Notably, the post-money valuation for this Series E round was significantly pushed to $3.02 billion, a 154.4% surge compared to the Series D valuation in September 2021 and approximately 251.67 times the seed round valuation. Based on its 2025 adjusted net profit of $47.674 million, the latest valuation implies a static price-to-earnings (P/E) ratio as high as 63 times. In comparison, the already-listed cross-border payment platform LIANLIAN (HKEX: 02598) reported an adjusted net profit of approximately RMB 1.871 billion for 2025, with a current market capitalization of about HK$4.527 billion, translating to a static P/E ratio of only 2.10 times.
LIANLIAN's valuation also reached a high of RMB 15 billion pre-IPO, but its stock price hovered around the IPO price for an extended period post-listing and even halved after the lock-up period expired. Although its stock price surged nearly 126% over three trading days in mid-2025, catalyzed by Hong Kong's stablecoin policy announcements, pushing its market cap to a high of HK$17.761 billion, the stock quickly retreated as the issuance of stablecoin licenses was delayed and the initial batch was extremely limited. Compared to a year ago, LIANLIAN's market capitalization has evaporated by 74.5%.
As the 'protective umbrella' of the private market is removed, the key question remains: can the company, with its concentrated business model and significant regulatory policy risks, justify its valuation under the intense scrutiny of the public markets?
Comments