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October 25, 2018
Dinggui Yan
Chief Executive Officer
Jiayin Group Inc.
26th Floor, Building No. 1, Youyou Century Plaza
428 South Yanggao Road
Pudong New Area, Shanghai 200122
People's Republic of China
Re: Jiayin Group Inc.
Amendment No. 2 to
Draft Registration Statement on Form F-1
Submitted October 12, 2018
CIK No. 0001743102
Dear Mr. Yan:
We have reviewed your amended 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.
Draft Registration Statement on Form F-1
Dividend Policy, page 71
1. We note your amended and restated memorandum and articles of association
will provide
for two classes of ordinary shares, Class A and Class B, and that your
founder, director
and chief executive officer, Mr. Dinggui Yan, will own all of the Class
B ordinary shares
issued and outstanding. Please revise your disclosure to specifically
address the dividend
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany NameJiayin Group Inc.
October 25, 2018
October 25, 2018 Page 2
Page 2
FirstName LastName
policy with respect to each class of ordinary shares. Please also
revise your disclosure
under Description of Share Capital--Dividends, on page 174, to clarify
whether your
board can declare a dividend payable to holders of a single class of
ordinary shares or
whether any dividend declared is payable equally to holders of Class A
and Class B
ordinary shares.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations--Net Revenue, page 109
2. You state that the increase in net revenues for all periods presented
was due to your
improved risk management capabilities, manifested by the decrease of
the stand-ready
liability from investor assurance programs managed by you as a
percentage of the total
service fees you are entitled to collect associated with facilitated
loans. Please address the
following:
Disclose the total service fees you are entitled to collect
associated with newly
facilitated loans and the related percentage of the stand-ready
liability from the
investor program by product for all periods presented; and
Disclose how your risk management capabilities improved considering
the overall
trend of increases in your M3+ delinquency rate and delinquency
rate by balance as
presented on pages 90 and 91.
Liqudity and Capital Resources, page 111
3. Please revise your disclosure to clarify that restricted cash was also
used to satisfy the
"other guarantee liabilities" and that prior to April 28, 2018, you
monitored the balance of
the investor assurance program and adjusted the percentage of funds
set aside to ensure
such funds could sufficiently cover expected payouts. Please also
disclose that subsequent
to April 28, 2018, all Investor Assurance fund payouts and
deficiencies will be funded
from working capital and future profits.
Business
Secondary Loan Market, page 131
4. Please revise to disclose the fees recognized from secondary loan
market activities in each
of the periods presented. Further, address the reasons the automated
investment program
would match longer term investment loan products with investments of a
shorter time
duration.
Credit Assessment Model, page 139
5. We note your response to comment 7 and your revised disclosures.
Considering that your
credit assessment and approval process is integral and critical to the
borrower transaction
process as discussed on page 137 and you state in your discussion that
you have been
using the scorecard module since 2016, please revise to either
disclose the credit scores
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany NameJiayin Group Inc.
October 25, 2018
October 25, 2018 Page 3
Page 3
FirstName LastName
determined in the prior periods, noting that such metrics are not
comparable due to the
evolution of your product mix, with explanations for significant
variances and specific
improvements made to your credit assessment capabilities or revise to
explicitly state why
you have not disclosed prior period credit scores.
Investor Assurance Program Managed by Us, page 142
6. Please revise to specifically disclose that the accounts receivable
and contract assets, net
included in the summary of metrics of the investor assurance program
managed by the
company, are for non-guarantee service fees available to fund future
operations.
Related Party Transactions
Transaction with Niwodai Finance, page 172
7. With regard to your transaction with Niowdai Finance, please address
the following:
Revise your disclosures, including Notes 1 and 6 to the consolidated
financial
statements, to disclose the source of funding for the RMB 2.9
billion in "other
guarantee liabilities" assumed in connection with the Niwodai
Finance acquisition in
December of 2015;
You state on page 171, that Niwodai Finance agreed to pay Shanghi
Caiyin an
aggregate amount of RMB 700 million as the total consideration but
on page F-7 you
state such amount was RMB 563,732 million. Please revise to
disclose the reasons for
the difference; and
Clarify in your disclosure why Shanghai Caiyin accepted RMB 700
million as total
consideration considering the assumption of RMB 2.9 billion in
other guarantee
liabilities.
Notes to the Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
(j) Restricted cash, page F-14
8. We note your response to comment 17. Please address the following:
Revise your disclosures to state that restricted cash primarily
represents funds through
designated deposit accounts for the investor assurance program and
other guarantee
liabilities assumed in the December 2015 Niwodai Finance
acquisition;
Disclose why contributions from borrowers related to the Investor
Assurance Program
are utilized for net payouts related to other guarantee liabilities
and if this is not the
case, disaggregate contributions from borrowers by program; and
Disclose why contributions from borrowers of RMB 1,399,787 in 2016,
RMB
2,940,554 in 2017 and RMB 1,673,076 for the six months ended June
30, 2018 does
not reconcile to collections in your Assets from Investor Assurance
Program of RMB
1,788,436 in 2016, RMB 2,657,792 in 2017 and RMB 1,212,823 for the
six months
ended June 30, 2018.
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany NameJiayin Group Inc.
October 25, 2018
October 25, 2018 Page 4
Page 4
FirstName LastName
(k) Investor Assurance Program, page F-15
9. We note your response to comment 10 and that in accordance with the
terms of the
investor assurance program, an investor is entitled to compensation
for losses resulting
from defaulted loans within 15 calendar days of the due date. Please
revise to specifically
disclose this policy.
10. Revise your Investor Assurance Program disclosures to clarify that
service fees collected
and segregated into the designated restricted cash account are also
utilized to satisfy
"other guarantee liabilities" assumed in the December 2015 Niwodai
Finance
acquisition. Please indicate whether the participants in the "Investor
Assurance Program"
were aware that the cash available for payouts to cover principal and
interest on defaulted
loans would be impacted by the guarantee liabilities assumed in the
Niwodai Finance
acquisition.
11. Tell us the basis for the difference between the weighted average
expected net
accumulative loss rates of 20.3% for 2016, 13.4% for 2017 and 10.4% as
of June 30, 2018
and the net expected accumulative loss rate of 14.1%for 2016 11.9% for
2017 and 11.3%
as of June 30, 2018 and clarify the relevance of each metric in the
determination of the
Investor Assurance Program liability.
12. Considering the overall trend of increases in your M3+ delinquency
rate and delinquency
rate by balance for 31-60 days, 61-90 days and 91-180 days as
presented on pages 90 and
91, disclose why the net expected accumulative loss rate utilized in
determining the
investor assurance program guarantee liability declined from 14.1% in
2016 to 11.9% in
2016 to 11.3% as of June 30, 2018.
13. Please revise the table presenting total outstanding loan balances,
maximum potential
undiscounted future payments, remaining weighted average contractual
term and net
expected accumulative loss rate by product on page F-17, to provide
disclosures by loan
product type consistent with the disclosure of liabilities from
investor assurance program
presented in Note 5 on page F-34. Similar disclosures should be
presented in the interim
period financial statements as well.
(o) Revenue Recognition
Other revenue, page F-22
14. We note your response to comment 14. Please address the following:
You state that based on the historical data prior to December 31,
2017, the actual
return of most investment products is greater than the offered fixed
return by a
consistent range of 1% to 2%. Considering the historical weighted
average APRs as
presented on page 135, tell us how you determined the consistent
range of 1% to 2%
and why such amounts are not higher;
Tell us your collection history for service fees earned from actual
returns exceeding
offered fixed returns related to your Automated Investment Tool; and
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany NameJiayin Group Inc.
October 25, 2018
Page 5
October 25, 2018 Page 5
FirstName LastName
Tell us how, considering the cessation of your investor assurance
program, future
defaults will be considered in the determination of actual returns
related to your
Automated Investment Tool.
Contract assets, net , page F-23
15. We note your response to comment 15 and that contract assets and
accounts receivable are
recognized based on fees collectible from borrowers on underlying loan
products. Please
address the following:
Confirm and revise your disclosures accordingly, that revenues and
related contract
assets and accounts receivable are recognized based on the
underlying contract terms
excluding consideration of impairment which is determined
separately in accordance
with ASC 310-10-35. Refer to ASC 606-10-45-3;
Tell us and revise your disclosures accordingly, to indicate the
reasons for not
recording an allowance for uncollectible accounts for contract
assets and accounts
receivable which are less than 90 days overdue. Please refer to ASC
310-10-35-5 thru
ASC 310-10-35-11; and
Disclose the nature and type of service fees related to contract
assets and accounts
receivable and when such amounts are due based on the underlying
contract terms.
16. Please revise to clarify that "Over 90 days" as reflected in the aging
of contract assets and
account receivable for all periods presented is equivalent to the M3+
Delinquency Rate by
Vintage as defined on page 89, which states that for any repayments
more than 90 days
past due the total amount is considered to be delinquent and
presumably uncollectible.
Note 5. Liabilities from Investor Assurance Program, page F-34
17. We note your response to comment 18. Please disaggregate prior year
net payouts
by vintage based of the underlying original liability (e.g. 2015 and
prior, 2016, 2017 and
2018).
Note 10. Related Party Transactions, page F-40
18. Please revise to disclose a rollforward of related party activity for
Jiayin Credit for all
periods presented. In addition, please provide a discussion addressing
the nature of the
activity and the business purpose.
Dinggui Yan
Jiayin Group Inc.
October 25, 2018
Page 6
You may contact Michelle Miller at 202-551-3368 or Marc Thomas at
202-551-3452 if
you have questions regarding comments on the financial statements and related
matters. Please
contact David Gessert at 202-551-2326 or Pam Long at 202-551-3765 with any
other questions.
Sincerely,
FirstName LastNameDinggui Yan
Division of
Corporation Finance
Comapany NameJiayin Group Inc.
Office of Financial
Services
October 25, 2018 Page 6
cc: Meng Ding, Esq.
FirstName LastName