GIC-linked China lending platform to sell US consumer debt in Asia

Singapore

ARMED with a fresh US$220 million injection from Singapore's sovereign wealth fund GIC and a group of investors, Chinese peer-to-peer lending platform Dianrong plans to launch a global platform to sell US consumer debt to Asian investors via offices in Singapore and Hong Kong.

The new platform, FinEX Asia, will source consumer loans from the US and connect its investors to these assets, which pay out a fixed monthly return to investors, top executives from the start-up told The Business Times.

The company's current focus is on Hong Kong and Singapore, where there are strong Internet capabilities, an entrepreneurial and mobile-enabled consumer base and a solid regulatory framework, said FinEX Asia's co-founders Maggie Ng and Soul Htite.

The platform and fund was launched in Hong Kong last month; FinEX Asia is setting up a similar structure in Singapore, said Ms Ng.

Within FinEX Asia's first month of operations, institutional and certified investors, mainly from Asia, have invested US$25 million in the FinEX Asia fund.

Ms Ng said: "Investors can expect to get between 5 and 12 per cent unleveraged returns, depending on their appetite for risk."

Mr Htite said: "Our platform enables Asian investors to create a diversified portfolio in consumer lending in the US. Through our platform, we simply connect investors to an online marketplace where they can choose their own investments."

He added: "Consumer lending is a highly profitable business and while traditional banks have heavy costs, technology lowers operational costs significantly.

"More and more people already understand what fintech is, and they know that there is a much bigger value in being a customer of a fintech company."

Before Dianrong, Mr Htite was the co-founder and head of technology at Lending Club, the world's largest peer-to-peer lending platform.

FinEX Asia uses Dianrong's tuantuanzhuan technology to allocate investor capital across hundreds of thousands of loan assets in real time, and charges a "small percentage" of the clients' investment.

Mr Htite said: "The technology behind our platform enables low-cost infrastructure, improved risk management and full transparency, allowing higher yield to our customers' investment."

Other Dianrong investors in the latest funding round included CMIG Leasing, a unit of China's biggest private-investment conglomerate China Minsheng Investment Group, and South Korean fund manager Simone Investment Managers.

Dianrong raised US$207 million in a 2015 fundraising round.

Last month, it bought the asset-origination business of Shanghai-based Quark Finance to increase the volume of loans in its platform, Reuters reported.

With this acquisition, it added 71 branches across 47 cities, which will need to be automated and upgraded with Dianrong's technology.

Mr Htite told Reuters: "We also want to keep capital on the side, just in case another M&A (merger and acquisition) opportunity appears."

Besides Singapore and Hong Kong, Dianrong studied the markets in Indonesia, Taiwan, Vietnam, Malaysia and Cambodia for potential ventures.

"There are places that we definitely are going to; we just need to make sure that we stay on our core strategy, which is China," he added. "We're in talks with partners in these countries already."

Reuters reported that Dianrong has not yet decided on an initial public offering, but said that the Chinese should be able to benefit from its growth - whether it goes public overseas or lists A-shares in domestic markets.