BEIJING, May 12, 2015 /PRNewswire/ -- Internet finance has drawn massive attention across China financial markets since 2007, appearance of the first online peer-to-peer lending platform. After a long wait-and-see period, many traditional financial industry big names want to join the party and establish their own sub-brands in internet finance industry, becoming strong competitors.
P2P industry developing rapidly with mixed players
According to statistics, by the end of 2014, there are more than two thousand P2P platforms in China, doubled the number of 2013, and the total lending of year 2014 amounts to more than billions Yuan.
Many problems are already surfacing after the "carnival". Negative news such as runaway bosses, failed businesses and illegal fund raising are widespread. Facing the messy situation, investors become worried and confused.
Market analysts keep warning investors of potential risks beyond high returns. Senior analysts Luo Zhixiang from Southern Finance Innovation Institution says, "For investors, it's important for them to choose a platform with independent risk-control department and strong shareholders. Also, it would be better if the platform used a third-party funds custodian."
P2P industry is now at a crossroad, traditional financial giants join this market
Lack of standardization arouse concerns from regulatory authorities and several regulators have publicly expressed that this industry would be under supervision and regulation soon. Notably, China Banking Regulatory Commission has formed Inclusive Finance Department to supervise the industry. According to an informed source, P2P platform admission regulation will publish soon.
Many giants from traditional financial industry have realized the industry's potential while the industry is going through a bottleneck period. For example, Ping An Group entered P2P market in 2011 and launched Shanghai Lujiazui International Financial Asset Exchange Co. Ltd (Lufax), with registered capital of 837mn Yuan.
Recently, Lufax plan to increased its registered capital to 485 million USD (about 3bn Yuan), driving the market focus back to internet finance again. Media reports that Lufax has already been valued at $10bn, nearly twice of the initial public valuation of Lending Club.
Similarly, China leading private equity firm JD Capital Co., Ltd. (JD Capital) seize the opportunity and has introduced its own P2P platform "Jiuxin Finance" recently. The platform's register capital summed up to 2bn Yuan, refreshing the record.
It's reasonable for JD Capital's action. It's market consensus that internet finance industry has great potential for further growth. Meanwhile, JD Capital has various type of financial assets, professional research and investment team and strict risk-control system, which are great advantages for JD Capital to step into the new industry.
JD Capital is famous for its robust style and high returns. As of April 2014, 45 companies which previously invested by JD Capital have been listed on China and international capital markets. Among these companies, seven are independent IPO enterprises and produced more than 10 times return. Star companies with share prices over 100 Yuan per share, such as Utour Travel and Feitian Tech, are also included.
JD management said that JD Capital plans to build a comprehensive financial asset management platform. The firm has currently set up the first public fund with private equity background, Jiutai Fund; and also controls Jiuzhou Securities to obtain securities license. In addition, JD Capital recently announced that it plans to construct a private bank as the main sponsor. As a key to complete the firm's layout, Jiuxin Finance can use the other resource and use independent third party custodian to ensure capital safety. It's clear to see that Jiuxin has great advantage in the market.
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Photo - http://photos.prnasia.com/prnh/20150511/0861503770-b