Yirendai is the peer-to-peer lending offspring of wealth management platform CreditEase. News has been swirling around the platform’s IPO on the New York Stock Exchange since the its confidential filing confidentially on 27 February 2015. When word first broke of the listing, it was said that Yirendai planned to raise approximately $300m at a valuation of around $2bn. Both figures have fallen a fair way since, with Yirendai ultimately going public at the mid-point of $9 to $11 price range.
The aftermath of the listing has seen the Chinese peer-to-peer platform’s share price decline. At its nadir, the price per share stood at $8.35, but has recovered somewhat to $9.10 today – according to Bloomberg. The IPO was sold on the strength of Yirendai’s c. 6.7m registered users, 99,000 active borrowers, 186,000 active investors, $1.38bn of cumulative lending, and revenues to date of $138m. Each number in isolation paints a pretty picture, but a number of concerns have been raised over the Yirendai business model over the past 9 months.
The revenue number stands out above the rest. The CreditEase spin-off has somehow managed to eek out around 10% of the value of its entire loan book in revenues – which is unheard of in say the UK or US peer-to-peer lending space. A number of industry commentators have suggested that such a revenue model will ultimately prove unsustainable.
The Yirendai share price will be well worth tracking. Both Lufax and China Rapid Finance are planning IPOs for 2016, and both look set to be significantly larger than the Yirendai offering – which should nonetheless serve as a useful yardstick.