CDH participates in $483m round for Chinese P2P lending platform

The round was led by BlackPine, a Hong Kong-based investment firm, and also featured the private equity division of China International Capital Corporation (CICC). AVCJ understands that CDH's individual commitment was $60 million, while the investment values Lufax at approximately RMB60 billion.

According to AVCJ Research, it is the largest-ever private equity investment in a Chinese P2P lending platform. It surpasses a $130 million round for Renrendai that was led by Trustbridge Partners last year.

Gregory Gibb, the company's chairman and CEO, confirmed the deal size when speaking to media at the Boao Forum in Hainan province. He did not name the investors, simply saying that a private placement had been made to institutional investors including private equity firms and individuals with a background in internet investing.

Lufax was set up in September 2011 with RMB837 million in capital and the support of the Shanghai government and Ping An. The management team is headed by Gibb, who was previously a senior partner with McKinsey & Company responsible for Greater China financial services coverage.

The company operates two platforms. Lufax.com is a standard P2P business, providing financing solutions to small and medium-sized enterprises (SMEs) and individuals. It matches borrowers and lenders, a Ping An subsidiary reviews risk and provides guarantees, and then funds are transferred via third-party payment.

The second platform, Lfex.com, is a financial assets trading platform that focuses on corporate investors and financial institutions. It is positioned as an "exchange of exchanges" that interacts with banks, insurance companies, securities firms, trust companies, asset managers, leasing and finance providers, and corporates.

A presentation on Lufax released by Ping An last year noted that there are no trading platforms for two thirds of domestic financial assets in China. It sees Lufax as a key player in the "non-standard asset market," which will sit alongside equities, bonds, foreign exchange and the interbank market as one of the country's five major asset markets.

P2P lending sites have proliferated in China with a view to supporting SMEs that don't qualify for bank financing. There were 1,263 sites as of June 2014, up from 600 at the end of 2013, 240 in 2012 and 20 in 2011. Most of the top 20 independent P2P lending sites have received VC funding, including PPDai, Yooli.com, Jimubox and Renrendai.

P2P transaction volume reached RMB10 billion in the first half of 2014, although concerns remain about improper lending practices and a potential regulatory crackdown.

Last week, Dagong Global Credit Rating placed Lufax on a list of 350 lending platforms that had significant credit risks, Bloomberg reported. It estimated that the platform's paid-in capital had fallen to RMB80 million from an earlier figure of RMB400 million, although Lufax said that none of its 7.5 million users had suffered any losses.

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• Topics
• Expansion
• Greater China
• Financials
• Technology
• China
• CDH Investments Management
• CICC
• Financial Services
• Technology
• Growth capital