The Chinese peer-to-peer market has displayed impressive growth figures. It is estimated that there are over 1,400 platforms in the country, and there’s no sign yet of a slow up in platform proliferation.
One platform that is actively looking for investment from dollar denominated funds is Jimubox. The platform announced this week that it plans to raise several hundred million dollars in the next year. Jimubox hopes to triple it’s lending to 10 billion yuan ($1.6 billion) and expand from 6 provinces to cover the whole country.
Jimubox is only a year old and counts Xiaomi, a Chinese tech company among its backers. Xiaomi were part of the group of investors that helped Jimubox raise $37 million in second round funding back in September 2013. Jimubox’s growth is extremely impressive – it estimates that it will have lent 3 billion yuan by the end of the year, up from 100 million yuan in 2013.
The platform is focused on a relatively young investor base – investors between 18 and 29 years old. 90% of its investors are under 39 – due in part to the fact that Jimubox requires a minimum investment amount of only 100 yuan (just $16). This is significantly different from the UK where the average age of investors is about 55-65 and many of the platforms are actively trying to attract younger investors.
CEO Dong Jun commented on the potential of Jimubox due to its appeal to young people:
"Our original target customer was someone who couldn't access high-end financial products at banks, couldn't access trust products, couldn't invest in products requiring 500,000 yuan or 1 million yuan. But they want returns higher than inflation. These types of investors are all young people."
The company assesses opportunities via 70 employees around the country conducting due diligence on prospective investments, a process which typically takes about 1-5 days. Most of its loans have a maturity of about 6 months to 1 year. The benefit of the platform for investors obviously comes in the 12.5% rate that they can earn on their investments, much higher than the interest rate offered by the banks.
The Chinese peer-to-peer lending space remains frustratingly opaque. It is difficult to understand the scale and penetration of it, as there is a distinct lack of reliable figures. It also lacks regulation and is waiting for an announcement of more detailed rules from the China Banking Regulatory Commission, which is expected later this year.