UK Firm Standard Chartered PLC Enters China’s P2P Scene
London based Standard Chartered PLC has invested $207 million in Chinese peer-to-peer (P2P) lender Dianrong.com.
Former Lending Club employee Soul Htite and financial lawyer Guo Yuhang founded Dianrong 3 years ago. The company focuses on consumer and small business loans ranging from 2,500 RMB (US$391) to 500,000 RMB (US$78,258).
Dianrong’s platform is similar to Lending Club and other P2P intuitions. Investors may chose from a variety of filters and fund loans at their own discretion through Dianrong’s online platform. There is also an option for lenders to have their funds invested automatically by Dianrong based on select filters.
The average return on investment in 2013 was 15.7 percent, with the majority of returns falling in the range of 14 and 17 percent. The company was initially funded with venture capital of $2.5 million, but later raised an additional $12 million in funding from Northern Light Venture Capital.
Alternative banking solution companies have been popping up all over China to take advantage of the rapid growth and new found wealth. Standard Chartered’s investment comes at no surprise, as foreign firms seek to take advantage of China’s new and more open foreign investment policies.
The Series C cash infusion was the largest direct foreign investment in China’s P2P industry in the third week of August. P2P lending in China has been estimated to grow up to $7.8 billion by the end of 2015. Despite the high dropout rate of Chinese P2P firms, Dianrong has weathered the storm and continues to receive support from direct foreign investment.