China’s Dominant Online P2P Lender Eyes $1B Funding

The largest Chinese P2P lender, Lufax, is on track to grab $1 billion in funding, amid an industry that is growing quickly.

The $1 billion that is being raised, according to Financial Times, would value the company at about $15 billion to $20 billion and comes on the heels of the $500 million that the firm grabbed in April of this year with a commensurate $10 billion valuation. The firm itself is a subsidiary of Ping An, the insurance firm, which remains Lufax’s most significant shareholder.

FT noted that both the online banking and the P2P lending spheres have been seeing rapid growth within China, as the nation has been making a push to grow financing between consumers and smaller businesses. The sector is large enough to support a few thousand players. And, in terms of value, that means as much as 209 billion renminbi at the end of the second quarter of this year. The growth in the sector has spurred the creation of large online banks and other lending vehicles, such as Ant Financial’s Sesame Credit, Alibaba’s Mybank and Tencent’s WeBank. Loans are growing at as much as 180 percent, according to Goldman Sachs, and the market for small to mid-sized borrowers — specifically, those Chinese consumers that are financially active but who do not yet have credit in place — tops 500 million.

Yet, even though the market may be attractive, the competition is such that many startups or young companies do not prove to be long-lived. As FT noted, in the past eight years, 370 P2P platforms have failed in China, with a great majority of that number having failed just in the past year, according to a Chinese research group working in tandem with Morgan Stanley.

[bctt tweet=”Yet, even though the market may be attractive, the competition is such that many startups or young companies do not prove to be long-lived.”]