Next step in IPOs for licensed P2P lending platforms
|Bank of England|
Together Funding, 8% are looking to go public earlier than their rivals
By Park Jae-hyuk
Licensed peer-to-peer (P2P) lending platforms have started implementing various survival strategies, including Initial Public Offerings (IPOs), amid difficulties resulting from recent decisions by Kakao Pay, Toss and Banksalad to end their partnerships with online lending platforms that allow individuals to obtain loans directly from other individuals.
Among licensees registered as “financial companies linked to online investments”, Together Funding and 8Percent are vying to become the country’s first publicly traded P2P lending platform.
Together Funding, which was licensed on August 26, sought to enter the high-tech Kosdaq market during this year.
After hiring securities Mirae Asset and Daishin as co-underwriters for its IPO in February last year, the P2P lending platform also successfully passed an audit in April by Samil PwC, a designated auditor. by the Financial Supervisory Service.
“It looks like the process of our IPO is in its final stages,” Kim Hang-ju, CEO of Together Funding, said in a press release. “After registering as a financial company linked to online investments, we can take a leap forward to become the leading P2P financial company. “
Mirae Asset and Daishin said Together Funding will successfully enter Kosdaq’s market on the basis of stable earnings growth.
According to industry officials, 8Percent has also continued listing on the Kosdaq market since 2019, hiring Daishin as an underwriter for its IPO earlier last year. The company is one of three companies that became the country’s first licensed P2P lending platforms on June 10.
While 8Percent remained cautious about disclosing details of its IPO plan, it was expected to step up its efforts to go public once it gets licensed.
“The fact that the licensed P2P lending platforms have already passed the meticulous checks of financial regulators is very likely to have a positive impact on their upcoming IPOs,” said an industry insider.
Daily Funding, another P2P lending platform considering an IPO, failed to obtain its license in August. Terafunding, the leading P2P lending platform in terms of cumulative loan amount, is also struggling to obtain a license, as the company has been repeatedly sued by one of its users, who claims to have committed fraud.
Data from the Financial Services Commission (FSC) showed that only 28 of the 237 P2P lending platforms operating in the market as of June of last year had been licensed by August 26. The FSC warned that companies that had not yet applied for the license could face closures, in accordance with the law on financial activities related to online investments and user protection.
“The registration of P2P lending platforms will protect its users, contributing to the credibility and development of the industry,” said an FSC official.
In the United States, an online personal finance company SoFi successfully went public in June at a valuation of $ 8.65 billion, thanks to its merger with a special purpose acquisition company (SPAC) , backed by venture capitalist Chamath Palihapitiya.
|Bank of England|
In addition to IPO attempts, some of the licensed P2P lending platforms are trying to attract large-scale investment for their ongoing operations.
Lendit, which was licensed on June 10, attracted a 50.4 billion won ($ 43 million) investment from H&Q Korea in July. Peoplefund, which was also licensed on June 10, has attracted a combined 66 billion won investment from CLSA Capital Partners.
In addition, P2P lending platforms are doing their utmost to make their own websites and apps more attractive, as they haven’t been able to market themselves on the main fintech apps.
After financial authorities warned fintech companies of the possibility that ads by P2P lending platforms on their apps could be interpreted as violations of the Financial Consumer Protection Act, Kakao Pay terminated its partnership with Peoplefund and Together Funding, while Banksalad ended its alliance with HonestFund. and Funding Together.
Apps Toss and Finnq have not offered services based on their partnerships with P2P lending platforms since the start of the year, as Toss app operator Viva Republica faced legal action from hundreds of users, who suffered losses due to the deferred redemption of its affiliate P2P platform provider caused by defaulting borrowers.
Market watchers also expect P2P lending platforms to capitalize on tighter lending regulations, as borrowers appear to rely more on such platforms that are not subject to regulations on the service. debt, loan-to-value and debt-to-income ratio.