Landmark Investment in China

Dianrong.com – the Chinese P2P lender – has secured a $207 million investment. The Shanghai Daily calls it the first time that a traditional lender has made a direct equity investment in an internet finance company.

The investment will be used to boost operations, expand products, enhance the brand and increase employees – with 2,500 expected to join within the next 18 months. Furthermore, the platform is looking to triple the size of its already 18 strong branch network, according to co-founder and chief executive officer Soul Htite. Soul was also a founder of Lending Club.

Zhu Wei – managing director and global co-head of SCPE – commented on the uniqueness of the investment:

“Standard Chartered Private Equity rarely invests in early-stage companies. We typically focus on growth and late-stage companies. Dianrong is an exceptional case.”

“We do not invest in a lot of companies, but emphasize on high quality investments and overall success rate; we would only like to invest in the best and most differentiated company in the industry"

High praise indeed. Htite emphasised that the money would be used correctly:

“The investment is substantial. We will not give the money to people who would spend their money on entertainment or those who would spend the money in the stock market. But rather, we will give it to those who will give the money back to the economy"

The investment is exciting, but perhaps it is not surprising that it comes in China – where capital is continuing to flow into. According to Payment & Clearing Association, in 2014 the turnover of Chinese P2P platforms reached 321.19 billion yuan – up 268.83% compared to 2013. Moreover, the number of platforms was up nearly 29% in the first 6 months of this year, compared to the end of last year, an increase of 900 platforms. Whilst the well reported risks are certainly there, the best Chinese platforms clearly aren’t struggling to attract significant equity investments.