Mail Stop 4561
January 9, 2018
Wei Wei
Chief Executive Officer
Pintec Technology Holdings Limited
216, 2/F East Gate, Pacific Century Place
No. A2 Gongti North Road
Chaoyang District, Beijing
People's Republic of China
Re: Pintec Technology Holdings Limited
Draft Registration Statement on Form F-1
Submitted December 13, 2017
CIK No. 0001716338
Dear Mr. Wei:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Prospectus Summary
Our Business, page 1
1. You disclose that you have 10 million registered users and over 2.6
million cumulative
unique borrowers as of September 30, 2017. For each period presented,
please disclose
the number of registered users; the number of unique borrowers,
including the number of
unique borrowers of personal installment loans versus the number of
unique borrowers of
point-of-sale installment loans; and the number of loans facilitated,
including the number
of point-of-sale installment loans facilitated versus the number of
personal installment
loans facilitated. In this regard, we note your disclosure suggests that
your point-of-sale
lending solutions business has represented a significantly higher number
of facilitated
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 2
loans and unique borrowers. For example, while you approved
approximately 575,000
customers for your personal installment loan credit lines in the
aggregate amount of
RMB4.1 billion in 2016, we note that the aggregate amount outstanding
was RMB998
million as of December 31, 2016. Further, for the nine months ended
September 30,
2017, the aggregate amount of credit lines that were approved was
RMB20.6 billion, but
the amount of personal installment loans facilitated was RMB5,071
million.
2. Please revise to disclose how you determine that a borrower is unique.
3. Please disclose your potential conflicts of interest with the Jimu Group
in the prospectus
summary. Also disclose that the company and Jimu Group are under the
control of the
same shareholders and the same board members. Clarify which, if not all,
members of
the company's board of directors also serve on the board of the Jimu
Group. Disclose
whether you have policies in place regarding the manner in which your
board will resolve
any conflicts of interest.
4. You state that you have 10 million registered users for your
point-of-sale financing and
your personal and business installment loan solutions as of September
30, 2017. We
note, however, that registration for your platform only requires a name,
identification
number, and mobile phone number and that an individual will not be
vetted for
creditworthiness until a loan request has been submitted, which
ultimately is subject to
the approval of a financial partner. As such, please revise the
definition of a registered
user provided on page 6, which suggests that a user is an applicant
whose
creditworthiness is being evaluated, as well as your reference to users
as "potential
borrowers" on page 109.
Non-GAAP Financial Measures, page 10
5. Please explain your basis for disclosing "Adjusted net service revenue"
and revise to
disclose how this measure is useful to an investor. Refer to Item
10(e)(1)(i)(C) of
Regulation S-K. Tell us why you have excluded wealth management service
fees and
explain why you have not reduced this measure for origination and
service costs. Also,
explain your basis for labeling this measure as a revenue measure when
it appears to be a
measure of profitability.
Risk Factors, page 12
6. You disclose on page 105 that you seek international expansion. Please
provide a risk
factor highlighting the risks inherent in this strategy. In this regard,
we note that you
intend to mitigate local regulatory and business risk by partnering with
local entities.
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 3
"We face credit risks in certain funding situations" page 17
7. Please disclose that you expect to bear credit risk for some personal
and business
installment loans that are facilitated pursuant to credit enhancement
arrangements that
you recently decided to undertake. As you intend to reduce your reliance
on Jimu Group,
which had provided guarantee services, address the risk that this
development poses to
your goal of minimizing the credit risk that you take on loans that you
facilitate.
"We are an emerging growth company . . . ," page 51
8. To the extent you have elected to use the extended transition period for
complying with
new or revised accounting standards under Section 102(b)(1) of the Jobs
Act, revise to
disclose that this election allows you to delay the adoption of new or
revised accounting
standards that have different effective dates for public and private
companies until those
standards apply to private companies, and as a result of this election
your financial
statements may not be comparable to companies that comply with public
company
effective dates. In this regard, we note the forepart of the
registration statement indicates
that you have elected not to opt out of such extended transition period.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 73
9. To provide additional context regarding your point-of-sale lending
solutions business,
please disclose that your point-of-sale installment loan business has
been operating at a
gross loss, as indicated by the audited statement of operations and
comprehensive loss of
Shenzhen Qianhai Minheng Commercial Factoring Co., Ltd. for the six
months ended
June 30, 2016, provided on page F-46.
Key Factors Affecting Our Results of Operations, page 73
10. You state that future profitability is substantially dependent on
shifting your product mix
to include a higher proportion of personal installment loans, including
the conversion of
users of point-of-sale installment loans to borrowers of personal
installment loans. We
note, however, that you tend to attract new business partners with large
user bases, like
Qunar, by charging relatively low fees for your point-of-sale lending
solutions. We also
note that the personal installment loans that you facilitate carry a
significantly higher
weighted average APR and the proceeds from personal installment loans
are used by
borrowers for general consumption purposes, as opposed to the purchase
of a specific
product or service of the respective business partner. As these factors
appear to
constitute a significant challenge to profitability and your goal to
serve as a "pure
financial solutions provider," please revise to discuss this challenge
and related risks and
the actions that management is taking to address them. Refer to Item 5.D
of Form 20-F
and SEC Release No. 33-8350.
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 4
Critical Accounting Policies, Judgments and Estimates, page 82
11. Revise to disclose your policy for and estimates related to the
allowance for credit losses.
Refer to Section V. of SEC Release No. 33-8350.
Share-based compensation expenses, page 85
12. Please provide us with a breakdown of all share options granted to date
in fiscal year
2017 and the fair value of the underlying ordinary shares used to value
such awards at the
grant date. To the extent there were any significant fluctuations in the
fair values from
period-to-period, please describe for us the factors that contributed to
these fluctuations,
including any intervening events within the company or changes in your
valuation
assumptions or methodology.
Liquidity and Capital Resources, page 89
13. Please revise to disclose the material amounts of cash and short-term
investments
disaggregated by currency denomination as of the most recent balance
sheet date in each
jurisdiction in which your affiliated entities are domiciled. For
entities within China,
disclose material amounts of cash held by VIEs separately from the
amount of cash held
by other entities.
Industry Overview
Consumer Finance Enablement Platforms in China, page 94
14. We note your disclosure on page 97 that non-bank SME lending will see
significant
growth in the future. Please quantify this projection to be consistent
with other
information derived from the report commissioned by you and prepared by
Oliver
Wyman.
Business
Our Financial Solutions
Lending Solutions, page 109
15. We note the loan term of your point-of-sale installment loans ranges
from 1 to 24 months.
On page F-18, however, you state that your financing receivables
portfolio mainly
consists of personal loans with the term periods ranging from 30 days to
12 months.
Please reconcile by providing clarifying disclosure in a footnote to the
table, or advise.
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 5
Business Development, page 120
16. You state that your Dumiao brand and your Polaris brand are "widely
recognized" in
China for financial solutions in consumer lending and wealth management,
respectively.
Although you disclose that you are a leading independent technology
platform enabling
financial services in China, we note your disclosures on pages 97 and 98
indicate that the
outstanding balance of consumer finance loans facilitated through
enablement platforms
and the assets under management facilitated by robo-advisory services
represented
approximately 1% and less than 1%, respectively, of the relevant market
in China at the
end of 2016. Therefore, please provide support for your assertion, or
revise.
Related Party Transactions
Transactions with BBAE Holdings Limited, page 145
17. Please identify the director of the company who also serves as a
director of BBAE
Holdings Limited.
Where You Can Find Additional Information, page 189
18. We note your statement in the second paragraph that representations and
warranties were
made solely for the benefit of the parties to agreements. Please revise
to remove any
potential implication that your exhibits do not constitute public
disclosure under the
federal securities laws.
Combined Financial Statements
Note 1. Organization and principal activities
(b) Reorganization
Basis of Presentation for the Reorganization, page F-9
19. You disclose that your presentation may not necessarily reflect your
results of operations,
financial position and cash flows of the Group had it existed on a
stand-alone basis
during the period presented. Please revise to provide an estimate, if
practicable, of what
the expenses would have been on a stand-alone basis, as if the company
had operated as
an unaffiliated entity. Also, revise to disclose an assertion that the
allocation methods
used are reasonable. Refer to Question 2 of SAB Topic 1.B.1.
(d) Risks in relation to the VIE structure, page F-12
20. Please revise to present the carrying amounts and classification of the
VIEs' assets and
liabilities on a more disaggregated basis, including the intercompany
payable to the
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 6
WFOEs for accrued service fees, if any. In addition, describe the
recognized and
unrecognized revenue-producing assets that are held by the VIEs. These
assets may
include licenses, trademarks, other intellectual property, facilities or
assembled
workforce. Refer to ASC 810-10-50-2AA.d and 50-5A.d.
Note 2. Summary of significant accounting policies
(h) Financing receivables, net, page F-18
21. Please revise to provide the disclosures required by ASC 310-10-50-6,
-7, -7A
and -11B(a)(1).
(n) Funding Debts, page F-20
22. Please revise to expand your accounting policy for funding debts.
Describe the terms of
your arrangements in further detail including the timing of cash
settlement or maturity.
(o) Revenue Recognition
Technical service fees, page F-22
23. Please revise to disclose the typical timing of revenue recognition for
credit assessment
fees. Also, tell us the amount of deferred revenue balance relating to
credit assessment
services that are recognized over time due to cash collection
limitations.
24. Please revise to disclose the typical term over which monthly payment
collection services
are provided and your standard billing terms.
(y) Segment reporting, page F-26
25. You appear to have 3 distinct lines of business: point-of-sale
financing, personal and
business installment loans, and wealth management products. Please tell
us how you
considered ASC 280-10-50 in your determination that you have one
reportable segment
and address the following:
Describe the company's internal management reporting process,
including the
organization and reporting structure;
Identify the individuals that report directly to the chief
operating decision maker
("CODM") and describe their responsibilities;
Describe how performance of the individuals that report to the
CODM is
evaluated, including consideration of compensation and
performance
bonuses;
Describe how budgets are prepared, who approves the budget at
each step of the
process, the level of detail discussed at each step, and the
level at which the
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 7
CODM makes changes to the budget;
Describe the level of detail communicated to the CODM when actual
results
differ from budgets and who is involved in meetings with the CODM
to discuss
budget to actual variances;
Describe how performance of the different lines of businesses is
evaluated;
Identify any lines of business that you believe meet the
definition of an operating
segment that are aggregated within your reportable segment; and
Describe the internal management reports, including the nature of
and level of
detail of financial information, reviewed by your CODM(s) and
used for
allocating resources and evaluating performance within your
organization.
Note 19. Subsequent events, page F-42
26. For any share options or other share-based awards granted subsequent to
the most recent
balance sheet date, please revise to disclose the expected impact that
the additional
awards will have on stock-based compensation expense in future periods.
Refer to
ASC 855-10-50-2(b).
Item 8. Exhibits and Financial Statement Schedules, page II-3
27. Please file your contract with Qunar as an exhibit to the registration
statement, or advise.
In this regard, we note your disclosure on page 15 that your cooperation
with Qunar
represented 55.8% of your total revenues in fiscal year 2016 and that
your business may
be substantially dependent upon your agreement and relationship with
Qunar. Refer to
Item 8.a of Form F-1 and Item 601(b)(10) of Regulation S-K.
General
28. Please supplementally provide us with copies of all written
communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your
behalf, present to potential investors in reliance on Section 5(d) of
the Securities Act,
whether or not they retain copies of the communications.
29. Please supplementally provide us with copies of any graphical materials
or artwork you
intend to use in your prospectus. Upon review of such materials, we may
have further
comments. For guidance, consider Question 101.02 of our Securities Act
Forms
Compliance and Disclosure Interpretations.
Wei Wei
Pintec Technology Holdings Limited
January 9, 2018
Page 8
You may contact David Edgar, Staff Accountant, at (202) 551-3459 or
Christine Dietz,
Assistant Chief Accountant, at (202) 551-3408 if you have questions regarding
comments on the
financial statements and related matters. Please contact Bernard Nolan,
Attorney-Adviser, at
(202) 551-6515 or, in his absence, me at (202) 551-3453 with any other
questions. If you require
further assistance, you may contact Barbara C. Jacobs, Assistant Director, at
(202) 551-3735.
Sincerely,
/s/ Jan Woo
Jan Woo
Legal Branch Chief
Office of
Information
Technologies and
Services
cc: Z. Julie Gao, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP