Bain leads $63m Series C for Korea's PeopleFund

Goldman Sachs and CLSA Lending Ark – an Asia-focused private debt investor backed by CLSA Capital Partners (CLSA CP) – and 500 Global also participated. Goldman and Lending Ark will advise the company on raising additional institutional capital, according to a statement.

PeopleFund previously received KRW12.3 billion from 500 Global, Kakao Pay, Dayli Financial Group, D3 Jubilee Partners, and Moru Asset Management in 2018, AVCJ Research’s records show. The following year, CLSA CP contributed KRW38 billion.

Established in 2015, PeopleFund is intended to serve as a solution to a structural problem in Korea’s low and mid-level credit space. Underserved by traditional banks, borrowers turn to non-bank lenders, which charge high interest rates. PeopleFund uses a credit-scoring algorithm to make rapid assessments and offer competitively priced loans, while maintaining low loss rates.

Many customers swap out floating rate, unsecured loans with fixed-rate, and amortized products from PeopleFund, which charges annual interest of around 11%.

It became the first digital lender to surpass $1 billion in loan originations, sourcing capital from around 400,000 retail investors. As of October, the company had issued KRW1.16 trillion in loans with a delinquency rate of 2.06%. The investment from Kakao Pay led to the company’s loan and investment products being offered on Kakao Talk.

P2P lending has surged in Korea in recent years, with 230 lenders active in 2019, up from 27 in 2015. This growth was accompanied by rising delinquency rates and allegations of fraud. Last year, rules came in requiring P2P lenders to register with the Financial Services Commission (FSC), have paid-in capital of at least KRW500 million, and cease lending money borrowed from commercial banks.

According to PeopleFund, the number of P2P lenders fell from 237 in August 2020 to 102 in May 2021. In June, PeopleFund, 8Percent, and Lendit were the first companies granted marketplace lending licenses by the FSC. The government has said it hopes platforms of this type can help boost the supply of mid-interest loans to low-income households.

8Percent recently raised KRW43.5 billion in funding led by BRV Capital Management. This followed a KRW50.4 billion investment in Lendit by H&Q Korea.

“In the US, the likes of Upstart and SoFi are valued at tens of billions of dollars and digital lenders issue credit cards. In Korea, this is only just beginning,” said Tim Chae, a managing partner at 500 Global. “I strongly believe that PeopleFund, with its proven technological capabilities, will become the leading innovative financial technology platform in Korea’s non-bank loan market.”

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• Topics
• North Asia
• Expansion
• Financials
• Technology
• South Korea
• Financial Services
• Bain Capital Asia
• CLSA Capital Partners
• Goldman Sachs
• 500 Startups
• Fintech