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Top fireworks maker to shift focus on P2P lending
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CHINA'S biggest fireworks maker Panda Fireworks Group Co said it will acquire 51 percent shares of online peer-to-peer lender Shanghai Jiayin Financial Information Services Co to shift its refocus on Internet financing, a latest example of accelerating capital operation over P2P industry amid tightening regulation.
The 25-year-old Hunan-based firework maker changed its name to Panda Financial Co, and plan to focus on "investment and wealth management of internet industry, information service, retailing business of construction material" after the acquirement, according to company's filing to Shanghai Stock Exchange today.
Panda Fireworks had a gross margin of 29 percent in 2014, while its one-year operation of P2P platform Yinhu.com gave a 54 percent return, the company said in a April 1 filing in response to regulator's inquiry on its proposed change of name and focus. The company plans to sell its fireworks business by the end of 2015 amid shrinking demand and environmental pressures, according to the filing.
P2P lending, a type of private lending promises higher interest rates and even higher return without going through banking system, is booming in China. The trading volume raised to a monthly record of 49.3 billion yuan ($US7.9 billion) in March, with numbers of such online platforms surged to 1,728 by the end of last month, said Online Lending House, a website that tracks the sector.
Though being a part of China’s "shadow banking" sector, the industry is poorly regulated due to low barriers to entry. A total 275 platforms reported fraud or difficulties to withdraw last year, with 183 folded in the first three months of 2015.
Regulation was said to be drafted and will officially announced by the end of June, arousing public concerns over P2P companies who are seeking an enlarging capital base to beat the industrial competition under a coming regulation.
"The mergers and acquisitions between listed companies and P2P platforms will turn to normal in 2015, " Huang Shiqiao, chief executive officer at P2P platform searching website Investor's House, told Shanghai Daily, "This means competition heated up to resource disputing among P2P industry."
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