Dianrong raises fresh funds to lend more to families and small firms

The P2P lending platform secures investments from Singapore’s GIC, a unit of China Minsheng, South Korea’s Simone Investment among others

PUBLISHED : Thursday, 03 August, 2017, 5:47pm
UPDATED : Thursday, 03 August, 2017, 10:47pm

Dianrong, one of China’s largest peer-to-peer (P2P) lending platforms, has raised US$220 million in the latest round of financing from a consortium of investors including Singapore’s sovereign wealth fund, and pledged to harness financial technologies (fintech) to ramp up support to small businesses and individuals.

The largest fundraising deal in China’s fintech industry since April 2016, it represented a success for Dianrong and the country’s top P2P players that strive to reach out to those who are underserved by the mainland’s existing banking system through technological innovations and network expansions.

Aside from GIC, CMIG Leasing, a subsidiary of China Minsheng Investment Group, the mainland’s largest non-state investment conglomerate, South Korea’s Simone Investment Managers and other institutional and individual investors are also among the investing group.

Dianrong did not disclose its valuation after the Series D round of funding.

Soul Htite, founder and chief executive of Dianrong, said the financing would reinforce the company’s commitment to “applying fintech to deliver greater financial freedom to Chinese families and small businesses”.

Htite was a co-founder of American P2P firm Lending Club.

Founded in 2012 by Htite and Chinese lawyer Kevin Guo, Dianrong teamed with FnConn, the financing arm of Foxconn, in March to include blockchain to its loan assessment system as they jointly tap supply-chain finance, aiming to help cash-hungry small and medium-sized suppliers obtain financing.

Blockchain, the technology behind the digital currency bitcoin, can be used as open, distributed digital ledger systems that record transactions efficiently.

Blockchain to play a key role in financing China’s SMEs

Over the past five years, China’s incumbent leadership has been pinning hopes on fintech businesses to help the country effectively reform the banking system dominated by state-owned lenders which normally focus on large-sized companies, while leaving millions of small firms and individuals unable to secure much-needed credit.

But the authorities have tightened monitoring and regulation on P2P since the beginning of last year, after dozens of online lending scams causing investors to incur losses totaling at least 100 billion yuan.

Regulators have recently tightened requirements for companies doing the P2P businesses, forcing them to appoint a custodian bank to oversee clients’ deposits and fully disclose information about the flow of the funds.

“In China, meeting the regulatory requirements and getting the license for the business is always a priority,” said Guo, who is also the co-CEO of Dianrong, adding that Dianrong will continue to be a “catalyst” for positive change within China’s fintech market.

In China, meeting the regulatory requirements and getting the license for the business is always a priority
Kevin Guo, Dianrong

Dianrong originated 16.23 billion yuan of loans last year, more than double the amount in 2015.

In 2015, the company netted US$207 million from a group of investors including Standard Chartered Private Equity and Tiger Global Management in the Series C round of financing.

In late April, China Rapid Finance, one of the mainland’s largest online consumer lending platforms, in terms of the number of loans transacted, netted US$69 million on the New York Stock Exchange, the first Chinese fintech business to have listed in the US since the end of 2015.

In April last year, Ant Financial, the financial affiliate of Alibaba Group, was valued at US$60 billion following a US$4.5 billion fundraising.

Alibaba is the owner of the South China Morning Post.