At the end of 2017, Chinese peer-to-peer online lending platform Dianrong plans to list in Hong Kong as soon as 2018, raising at least $500 million, the Wall Street Journal reported, citing a report. In fact, Before this, Dianrong has been rumored for many times to be about to go public. The reason why the listing news is frequently rumored is related to the multiple rounds of financing dianrong has experienced.
Since Dianrong was invested by Shanghai Zhijing Angel in 2013, dianrong has successively obtained multi-party financing. In August 2017, Dianrong completed a ROUND D financing of $220 million; In January 2018, Dianrong received an additional INVESTMENT of us $70 million in the D round, so far, the series financing scale of Dianrong reached US $290 million.
After the completion of financing, Dianrong’s IPO target seems to be not far away. However, from the current development of Dianrong, before launching the IPO, there are still some problems to be solved.
Become a medium net loan industry, but losses may continue
Dianrong was founded in 2012 and officially changed its name in 2017. Unlike many peer-to-peer online Lending platforms in China, Dianrong’s business model borrows from Lending Club, the world’s first PEER-to-peer lender.
After several years of exploration, Dianrong has become a veritable “medium student” in P2P online lending industry. In 2017, Dianrong ranked 22nd in the TOP100 total transaction volume of online loan industry, with a total transaction volume of 22.054 billion yuan. The turnover seems not low, but compared with other platforms in the same industry, it is actually insufficient and more than below.
For example, in 2017, the total turnover of lujin Service, which ranked first, was 134.4 billion yuan, Hongling Venture Capital was 111.526 billion yuan, and the total turnover of Youjin Suo, Hesheng Credit, which ranked second, was less than 10 billion yuan, and the turnover of some platforms was less than 5 billion yuan. In contrast, dianrong’s turnover of 22.054 billion yuan is much different from the head platform, but compared with other platforms, it is still a “small achievement”.
Since its launch, Dianrong has gone through several rounds of elimination and precipitation in the online lending industry. During the great regulatory reshuffle in 2016, many P2P platforms went bankrupt, but Dianrong survived.
The surviving dianrong has its own experience on the compliance road, that is, to avoid all possible risk operations. In 2014, when campus loans were all the rage, Dianrong did not follow the trend; In 2015, it did not enter the Internet financial platform of stock matching, and avoided the down payment loan in 2016… Avoid these risks perfectly, only to keep consistent with industry compliance, in order to “good weather” development goals.
But things are not going so well.
The first is platform losses. In 2016, the profits of most online loan platforms tended to improve, but Dianrong failed to keep pace with the public, instead, it has been in a state of huge losses. According to the financial statement, Dianrong lost 179 million yuan in 2016, which was down from 229 million yuan in 2015, but not by much. In this regard, Guo Yuhang, founder of Dianrong, said that platform profitability is within reach, but this goal seems to be difficult to achieve.
This is not difficult to understand. Dianrong only plays the role of channel, and there are few asset terminals connected to the platform. Most of the asset terminals are connected externally. The lack of asset end directly leads to the loss of dianrong, and in today’s increasingly stringent industry regulation, the competition of online loan platform will become more and more fierce, and high-quality asset end can not be found. Therefore, if Dianrong has been unable to control the good asset end, it is conceivable that the loss of the platform will continue for Dianrong, which lacks the support of profitable business.
In addition, high operation and customer acquisition costs, compliance expenses and other factors are also the major factors causing the loss of point finance, point finance is facing multiple troubles under the pressure of loss.
Secondly, the main product “live chestnut earn” predecessor “Tuan Tuan earn”, there is the loophole of unknown funds. Tuantuan makes money by pooling investors’ money and then looking for suitable investment projects. In practice, however, many bids remain unsold for a long time, and investors are unable to get information about the projects they are investing in, which makes it impossible to predict project risks. Now that “tuantuan earn” has been upgraded to “live chestnut earn,” it is unclear whether this problem can be improved.
In a word, Dianrong, which has successfully copied the Lending Club model, has made some achievements in the domestic P2P online Lending industry. However, under the pressure of supervision, dianrong not only needs to make full efforts to pass the reordering period, but also needs to upgrade its products and improve its operation model, so as to achieve its profit target as soon as possible.
Behind the caution, there are unspeakable “pain” in dianrong.
In general, for the development of P2P lending industry is not yet mature, platforms must be careful to move forward, in order to avoid stepping into the minefield of doom. As mentioned above, Dianrong perfectly avoids several major industry development mistakes and tries to make its own business compliance. However, “people walk in rivers and lakes, where are not wet shoes”, in addition to capital losses, there are two unspeakable “pain” on the road of compliance.
For one thing, melting is not as safe as you might think. As can be seen from the investment characteristics of Dianrong, it belongs to scattered investment, that is, it does not put all eggs in one basket in order to disperse funds and improve the security of users’ investment. In this regard, dianrong vigorously publicized this feature, claiming their own high dispersion, good safety performance.
However, data from Wangdaizhijia showed that diarong’s capital dispersion was at least 10 points lower than other P2P platforms, such as Lufax, Renrendai and Renrendai, at 78.31 on average. According to this data, at least the capital dispersion of Dianrong is difficult to match that of some online loan platforms, which cannot be the product characteristics that Dianrong is proud of. Moreover, from this low degree of dispersion, whether the project products of Dianrong are really safe remains to be investigated.
Secondly, the overdue rate of point-financing products is high, and the fund matching mechanism is extremely unreasonable. Recently, It was revealed that the system of Dianrong automatically matches expired bids for users, which not only brings great confusion to users, but also may cause losses.
According to the report, the bidding that Dianrong matches with users is mandatory, meaning that users cannot decide which bid to invest in or not to invest in, and these are all handled by Dianrong’s system. In this case, all the bids of point finance, including new bids and overdue bids, are mixed together, and the system will inevitably match overdue bids for users.
After matching the overdue bid, the processing method of spot financing also has some unreasonable points. Once the target locking period, the overdue bid will not be able to transfer out, the user wants to transfer success to deduct the overdue part of the amount. In this regard, Dianrong’s handling method is quite unreasonable. Users are completely passive, not only unable to predict the situation that they may encounter overdue targets, but also may suffer financial losses once they encounter them.
Data comparison, the overdue rate of point melting is not low. Data from China Internet Financial Registration and Disclosure Service Platform show that by the end of February 2018, the overdue rate of Building Blocks Box project is 3.6%, while the overdue rate of Xinerfu and Renrendai project is even lower, only 0.09% and 0.01%, while the overdue rate of Dianrong project is as high as 5.24%. The high overdue rate may also be the driving force for Dianrong to deviate from users. In the long run, this unreasonable approach is tantamount to shutting out more potential users.
In a word, the point finance with low dispersion but high overdue rate not only needs to continue to strengthen product safety performance, but also needs to return to rationalization and humanization in the way of dealing with problems. Otherwise, in the long run, these two great unspeakable “pain” is likely to corrode into a bigger wound, and eventually devour the platform bit by bit.
The acquisition of Kwak Financial, dianrong listing pace or speed up?
Things weren’t so bad, either. Even without a profit, Dianrong persevered.
In March 2018, Dianrong celebrated its fifth anniversary. By the end of February this year, the registered users of Dianrong platform exceeded 4.3 million, with a compound growth rate of 201% and a cumulative investment of over 48 billion yuan. Behind this achievement lies dianrong’s numerous measures to “de-lending Club”.
All dianrong has done is to expand the platform and achieve the goal of listing at an early date. It’s not unusual for online lending platforms to go public these days, but with more and more platforms going public, dianrong’s plans to go public have inevitably become a little more urgent.
Following the successful listing of Renyendai in December 2015 in the United States, in 2017, Xinerfu, PpDAI, Hesheng and other online loan platforms also went public in the United States, opening a new boom of domestic online loan platform listing. Behind this phenomenon is the recognition of the domestic online loan platform by foreign capital market, which is also a great benefit for the domestic online loan industry under great supervision.
Whether dianrong’s profit dream can be realized to illuminate its road to listing is still an urgent problem to be solved. In July last year, Dianrong, lacking in asset end, acquired Quake Finance, which had asset end resources, including its credit factory and relevant branches and teams, and officially merged into Dianrong. After the acquisition, Dianrong’s customer resource acquisition and credit audit capabilities will be further consolidated.
With the multiple product forms of Quaker financial asset end and the advantage of covering 47 cities across the country, the gap in the asset end of Dianrong may be made up to a certain extent. However, Quack finance has only 71 borrower service centers nationwide, and its limited range of people can not make up for the large gap in the asset end of Dianrong. Therefore, whether it is profit or listing, Kwak Finance cannot play a decisive role, and the final result depends on Dianrong itself.
So far, Dianrong has made little headway in the P2P lending industry, leaving users with the same impression: a big platform, low returns and low interest rates. If this phenomenon continues, not only will dianrong’s listing target be far off, but it may be gradually surpassed by other platforms in the “gentle and gentle countryside”.
Rectification is still the net loan platform “magic spell”, the road to listing is still full of dangers
In general, in addition to the market environment, most of the development obstacles faced by Dianrong should be attributed to the platform itself.
The occurrence of these obstacles has also become a stumbling block on the way to the listing of the financial, containing its steps. However, from the point of financing has obtained the financing situation, capital at this time choose to come in to take dish, nothing more than to go to the IPO. Therefore, in order to speed up the pace of IPO and give a satisfactory “reply” to the capital as soon as possible, dianrong should begin to remove development obstacles.
However, the network is changeable, before the removal of development obstacles, P2P network loan market is also facing the record of this big test, many platforms have a headache. In 2018, the online loan industry will enter the era of record filing, which will be a new starting point for the online loan industry and a new starting point for many online loan platforms. Under the record system, the concentration of the online loan industry will continue to rise, and some non-compliant platforms will retire one after another.
As of the end of December 2017, there were 1,931 platforms in normal operation in the online lending industry, 517 fewer than in 2016, data showed. This year, as the rectification process of online loan platforms continues, many small and medium-sized platforms will also accelerate their departure this year, and it is expected that the number of normal operating platforms will continue to decrease throughout the year.
The reason for the decrease in the number of network loan platforms is that the number of problematic platforms is still high. After the negative news of campus loans, cash loans and so on, many platforms failed to get rid of the shackles of their own problems, but turned them into traps, and finally trapped themselves.
But on the other hand, rectification is still the “curse” of the network loan industry, controlling the forward direction of all P2P network loan platforms. It is the only way to go in the development process of network loan, and also the supervisor of the network loan platforms to mature. It can be said that rectification is a good assistant for the online loan industry to become more compliant. Online loan platforms should face up to their own problems and actively embrace compliance.
The reality should also be so, this is the necessary process for the long-term survival, development and growth of online loan platform. Times are changing, a period of a period of the story to tell, the current network loan industry is about the story of the record. As for the industry as a medium student dianrong how to write their own listing story, we wait and see.
Article/Liu Kuang public account, ID: Liukuang110