Shanghai-based peer-to-peer lending platform Dianrong is looking to raise $100 million in fresh funding, according to a Financial Times report, a move that should give it enough buffer to meet China’s strict capital requirement for P2P players.
The GIC-backed firm has not made any official statement about its fundraising plan but analysts said the move is part of the firm’s efforts to meet Beijing’s proposed Rm500 million ($74.5 million) capital requirement for P2P operators nationwide.
Dianrong‘s investors also included CMIG Leasing, a unit of China’s biggest private investment conglomerate, China Minsheng Investment Group (CMIG), Tiger Global Management, Japan’s Orix Corp and CLSA, part of China’s CITIC Securities.
According to Crunchbase data, Dianrong has raised a total of $549 million in funding over seven rounds since December 2013. It raised the most funding – at $290 million – during its Series D round.
Founded in 2012, Dianrong offers loan origination, investment products, and marketplace lending solutions. The startup claims that it is facilitating $500 million worth of loans each month for four million retail borrowers.
In March, Reuters reported that Dianrong was shutting down 60 of its 90 offline stores and laying off an estimated 2,000 employees.
According to the report, the shrinking of Shanghai-based Dianrong comes amid Beijing’s multi-year crackdown on risky practices and excessive leverage in the financial system that has seen a wave of P2P company collapses and triggered protests by angry investors who lost their savings.
Chinese regulators have been cracking down on fraudulent P2P platforms, leading to panicked investors pulling their investments out of the platforms and causing them to lose confidence in smaller lending platforms.
According to a Fitch Ratings report, China’s tighter regulation and weak investor sentiment are likely to cause the country’s P2P lending to continue to shrink or consolidate.
The number of P2P platforms in the country reached 1,872 in May 2018. It then shrank to just 1,009 in January of this year and the number could further decline to as few as 300 within 2019, according to Shanghai-based research organisation Yingcan Group.