Credit China plans to acquire Internet Microfinance business in Hainan

Credit China Holdings Limited, a leading financing service provider in China, said it signed on May 1 two memorandums of understanding (MOU) to acquire a P2P business as well as a certain percentage of the issued share capital of an Internet microfinance business.

The planned acquisitions will help Credit China become a benchmark enterprise in the P2P financing platform in China and bolster its position in the Internet financing sector, thereby enhancing its overall competitiveness.

Under the first MOU, Credit China plans to acquire two domain names (www.9888.com and www.9888.cn), a P2P micro finance "Financial Workshop" service platform and the platform's registered users from Beijing Phoenix Credit Management Corporation. The service platform mainly targets individuals, self-employed entrepreneurs and small enterprise borrowers with financial needs of US$7,987.00 (50,000 renminbi) to US$319,501.00 (2 million renminbi). Its investors are mainly Internet customers.

With the help of Internet technologies, the platform facilitates the launch of projects, completion of projects and release of loans on the same day. The website has approximately 5,100 registered customers, with approximately 1,600 customers engaging in transactions. Since its launch in July 2012, the Financial Worksop platform's online and offline lending has amounted to more than RMB400 million.

In a separate move, Credit China plans to acquire a certain percentage of the issued share capital of Hainan Pioneer Internet Microfinance Limited from Phoenix Asset Management Limited. Hainan Internet Microfinance was established in Haikou, Hainan, and has registered capital of about RMB100 million.

It was the first microfinance company to be permitted by the Hainan provincial government to release loans through the Internet. It provides high-quality financing services to micro enterprises, and is one of the first non-banking financial institutions to obtain an Internet lending license in China. Credit China will be entitled to appoint directors to the board of directors of Hainan Internet Microfinance and to participate in its management.

Traditional microfinance companies spread its businesses regionally and vertically. However, costs have increased with the number of customers and operational scale. Hence, these companies encounter bottlenecks in their development.

Internet microfinance companies are internet-based, breaking the traditional linear model by reaching customers through technical network platforms without geographic restrictions. As the number of customers and transaction amounts increase, operational costs are further diluted, thus offering lower financing costs and higher financing efficiency to customers.

"Credit China has accumulated risk management experience in traditional financial services to develop its P2P business. By actively seeking merger and acquisition opportunities, including the planned acquisition of Financial Workshop, Credit China aims to accumulate Internet users and expand the size of loans quickly to become the benchmark enterprise in the P2P financing platform in China," said Phang Yew Kiat, co-chairman of Credit China.

SOURCE: theasset.com