Japan’s Orix invests $60m in GIC-backed Chinese P2P lender Dianrong

Dianrong leadership team: (from left to right) CEO Long Hsiang Loh, founder and executive chairman Soul Htite and founder and co-chairman Kevin Guo. Source: Dianrong website

Orix Corp has invested $60 million in peer-to-peer lending platform Dianrong, in what is the Japanese financial firm’s first investment in a Chinese fintech venture as it looks to tap into the fast-expanding sector, sources said.

Japanese insurers and banks have been actively trying to invest in fintech startups amid threats to their established business from the emergence of “disruptive” services using technologies such as artificial intelligence and blockchain.

Along with Orix, CLSA, the overseas platform of China’s Citic Securities, is putting another $10 million into Dianrong, said the sources who have direct knowledge of the matter, bringing total investment in the P2P firm to $70 million.

“We should pay more attention to fintech startups in China. There are so many and they are growing so fast,” said a senior executive at one of Japan’s biggest life insurers, which was not involved in the Dianrong deal.

Unsecured consumer lending via Chinese online platforms more than tripled in 2016 to almost $140 billion, according to a report by the Cambridge Centre for Alternative Finance.

Such lending, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for over 85 percent of all such activity globally in the year before last, a report said.

But Beijing has been forced to take measures to regulate online financial activity following a spate of scandals, frauds and high-profile P2P failures.

Dianrong was launched in 2012, after which it expanded into services such as supply-chain financing using blockchain, as it looked to grow beyond the crowded Chinese market.

The Shanghai-based firm raised $220 million from Singapore’s GIC Pte Ltd and other investors in August. It did not disclose its valuation at the time.

Co-founded by Soul Htite who was also behind U.S. online lender LendingClub Corp, Dianrong already has big backers including the private equity arm of Standard Chartered and technology-focused investment firm Tiger Global Management.

Orix, through its investment, is hoping for possible joint ventures when Dianrong launches businesses in other Asian countries, said the sources, who did not want to be named as they were not authorised to speak to media.

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Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.