Chinese Peer-to-Peer Lender Ppdai Plans U.S. IPO
October 18 2016 - 7:50AM
Dow Jones News
A Shanghai-based company is banking on U.S. investors' appetite
for China's fast-growing peer-to-peer lending industry as it plans
an initial public offering that could value it at roughly $2
billion.
Shanghai Paipaidai Financial Information Service Co., known as
Ppdai.com, is in discussions with bankers to launch an IPO in the
U.S. as early as the second half of next year, according to people
familiar with the matter.
The company, which was founded in 2007 and claims to be among
the first online platforms in China to offer P2P unsecured loans,
could hire banks to work on the offering by the end of this year,
one of the people said.
A spokeswoman for Ppdai declined to comment.
Ppdai joins rivals including Lufax and Dianrong.com looking to
raise money during a period of explosive growth in China's online
P2P lending sector. Such lenders, which match small-scale lenders
with borrowers, are aiming to fulfill Chinese consumers' demand for
loans that have usually been ignored by the country's state
banks.
Chinese lenders have traditionally preferred to offer loans to
big, state-owned companies with collateral and avoided lending to
individuals and small-businesses.
Ppdai is considering a listing in the U.S. partly because of the
logjam of more than 800 companies planning IPOs in mainland China,
according to a person familiar with the matter. It is also hoping
to capitalize on the strong stock performance of Beijing-based
Yirendai Ltd., which listed in New York in December 2015. Yirendai
became the first Chinese online P2P lender to list overseas. Its
stock has more than tripled in value since.
But the sector's lightning-fast growth has run ahead of Chinese
regulators and led to several implosions, the most high-profile of
which was Ezubo Ltd., which authorities said stole $7.6 billion
from thousands of small investors.
By the end of June, there were 2,349 platforms operating in
China, with 621.3 billion yuan in loans outstanding at the end of
June—five times the amount they had at the end of 2014, according
to data from the banking regulator. The data showed that more than
40% of the platforms were found to have problems at the end of
June.
In August, Chinese authorities imposed new rules on P2P lenders
limiting the amount of credit available for borrowers and capping
the number of products lenders can offer.
The growth of China's P2P sector comes amid a wider boom in the
country's financial-technology space. One of the sector's biggest
success stories is Ant Financial Services Group, Alibaba Group
Holding Ltd.'s financial-services affiliate, which was valued at
$60 billion in its latest fundraising round. Ant is planning an IPO
that could come as early next year.
U.S. peer LendingClub Corp. has also suffered setbacks. Its
chief executive was ousted in May after the board uncovered
disclosure issues under his watch. Its market value is currently $2
billion, down dramatically from its $5.4 billion valuation at the
time of its IPO in December 2014.
Kane Wu contributed to this article.
Write to Alec Macfarlane at Alec.Macfarlane@wsj.com
(END) Dow Jones Newswires
October 18, 2016 07:35 ET (11:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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