China Rapid Finance Said to Target U.S. IPO as Soon as 2017 (1)

(Bloomberg) -- China Rapid Finance, a Shanghai-based peer-to-peer lender, is planning to raise at least $100 million in an initial public offering in the U.S., people familiar with the matter said.

The company, which raised $20 million at a pre-money valuation of $1 billion in November, could hold the IPO as soon as this year, the people said, asking not to be identified because the information is private. The money will be used to fund expansion in China, one of the people said. The company declined to comment in an e-mailed statement.

China Rapid Finance is one of the largest players in a domestic online lending industry that’s exploded in recent years, as a growing middle class seeks a better return on investments beyond what state banks offer. Despite seeing a shakeout last year, transactions in the sector are expected to reach 3.7 trillion yuan ($539 billion) by 2019, according to Shanghai-based consultancy iResearch.

Founded by Zane Wang in 2001, China Rapid Finance competes with Lufax, formally known as Shanghai Lujiazui International Financial Asset Exchange Co., a company that’s also marching toward a a potential IPO. China Rapid Finance serviced 1 million borrowers and handled 8.8 million loans as of the end of October, it said in an e-mailed statement in November.

The company’s November raising included an investment from China United SME Guarantee Corp.

China’s peer-to-peer lending industry brokered 982 billion yuan of loans in 2015, almost quadruple the amount in 2014 and an approximately 10-fold increase from 2013, according to consultancy Yingcan. The proliferation of online lenders has however attracted scrutiny from regulators concerned about defaults and possible fraud.

In 2015, the country’s biggest Ponzi scheme was exposed after Internet lender Ezubo allegedly defrauded more than 900,000 people out of the equivalent of $7.6 billion. The government has since imposed limits on lending by peer-to-peer platforms to individuals and companies in an effort to curb risks.

(An earlier version of this story corrected the year China Rapid Finance was founded.)

(Updates with earlier backer in fifth paragraph.)

To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net, Crystal Tse in Hong Kong at ctse44@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

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