Tiger Global invests in China P2P online lending site Dianrong
Tiger Global Management has invested an undisclosed sum in Dianrong.com, a Chinese VC-backed peer-to-peer (P2P) online lending service platform.
Dianrong was launched in March 2013 by Soul Htite, co-founder of US-listed Lending Club, and Kevin Guo, an intellectual property lawyer. The platform connects individual lenders with small-scale borrowers, essentially meeting the needs of small and medium-sized enterprises that don't qualify for bank financing.
It enables borrowers to get loans below market rates, and lenders can earn returns above those available on traditional fixed-income investments.
The firm previously raised institutional rounds from Northern Light Venture Capital and Hong Kong financial institution Sun Hung Kai & Co. Francis Leung, Greater China chairman at CVC Capital Partners, has also invested in a personal capacity and joined the company's board in November.
Guo noted in a statement that more Chinese P2P online lending sites are expected to raise funds this year as the market matures.
Tiger Global began conducting due diligence on China's online P2P lending market in 2013. "We had met each other mainly twice within a month, then Tiger Global decided to invest in us," Guo said. Tiger Global's spokesperson said the firm was attracted by Dianrong's consistency in technology innovation and compliance with the law.
There were 600 P2P lending site in China at the end of 2013, up from 240 in 2012 and 20 in 2011. As of June 2014, there were 1,263. Transaction volume reached RMB10 billion in the first half of the year - close to the full-year total for 2013 - according to the Internet Society of China. Most of the top 20 P2P lending sites have received VC funding, including PPDai, Yooli.com, Jimubox and Renrendai.
The explosion in activity has made the regulators sit up and take notice. If and when they do impose stricter requirements in order to protect customers, it will bring additional pressure to an already fiercely competitive industry.
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