Chinese Lending Platform Has Rocky US Debut

The road to public market riches is a rocky one, sometimes, as evidenced by one recent IPO, that of Yirendai, which is a Chinese P2P lender that is CreditEase’s consumer finance arm. The stock traded nearly 17 percent intraday below the offer price, which indicates some real concerns among investors, as Reuters noted Friday (Dec. 18).

The company itself serves a strong niche, in providing loans to Chinese consumers who otherwise might not be able to obtain them, especially from the traditional lending marketplace. With roughly 6.7 million registered users, the company has seen its loan facilitation grow exponentially to $984 million in loans through the nine months that ended in September of this year, versus only $41 million that covered all of 2013.

The CreditEase company (and thus optimism over its portfolio) has some marquee backers, including Kleiner Perkins Caufield & Byers and Morgan Stanley’s private equity firm. The parent company Yirendai offers unsecured credit loans to prime borrowers in China, using an online marketplace that some have likened to other peer-to-peer platforms, such as Lending Club. The platform is among the first to be listed overseas in the United States.

In reference to the IPO itself, the company raised about $75 million through ADRs listed in the U.S., with an initial offer price of $10, which was a rather tepid price point given the expected $9 to $11 range. The initial valuation at that point was $585 million in terms of market cap.

In an interview with Reuters, the chief financial officer of Yirendai, Dennis Cong, said that the slide in the IPO was “a little surprising, given how strong” demand had been. “The market volatility or the end of the year has some play in it,” he added in his commentary to the newswire.