By Guglielmo de Stefano on Monday 4 January 2016
Beijing-based P2P lender Weijinsuo has completed a hefty investment round, led by HNA Capital Group Co.
Chinese P2P lending platform Weijinsuo recently announced the closure of a RMB300 million (US$46 million) series A investment round. The fundraising was led by HNA Capital Group Co., Ltd., the financial services arm of Chinese conglomerate HNA Group.
Founded in 2013, Weijinsuo is one of the thousands of P2P lenders that are currently helping to shape the frenetic Chinese alternative finance space. At the moment, the platform counts 700,000 registered users and an aggregate transaction value of RMB4 billion (US$616 million). The platform says that investors benefit from an average annual yield of around 11.7% with up to 36 months of lock-up period. It lends to both individuals and SMEs.
Here at AltFi we’ve been keeping a close eye on a series of big investments in the Chinese space. The Chinese peer-to-peer lending market is benefiting from a substantial influx of equity capital. Chinese peer-to-peer (P2P) lending platform Dianrong.com is reportedly looking to raise as much as $500m in a round that will likely take place early this year. Similarly, Lufax is reportedly close to raising $1 billion in a new funding round that will value the company at approximately $18 billion. Finally, CreditEase's peer-to-peer lending offspring Yirendai recently raised $75m by offering up 7.5m of American Depository Shares at a price range of $9 to $11.
According to China News, the Chinese peer-to-peer lending market is the world’s largest in terms of cumulative lending volume, with $150 billion lent at the close of 2015. In the year just ended, the space counted more than 3,000 active online lenders, but also approximately 896 failed platforms.
Furthermore, the China Banking Regulatory Commission (CBRC) has recently released a set of draft rules for peer-to-peer lending, clearly mimicking the FCA’s approach in some aspects. These rules include the banning of guarantees to clients and defining peer-to-peer platforms as intermediaries, able only to link together investors and borrowers.
This wave of equity investments in the sector should help the dominant Chinese P2P platforms to expand further while the new regulatory framework is likely to help clean the sector up. But can the big platforms keep up their rapid growth rate and will investors really make their money back based on some of the sky high valuations on some of the deals? Watch this space.