Sovereign Wealth Fund in Singapore Buys Into Chinese Peer-to-peer Lending Platform

18 Jul Sovereign Wealth Fund in Singapore Buys Into Chinese Peer-to-peer Lending Platform

A sovereign wealth fund in the island city-state of Singapore, which is known as GIC Pte Ltd, is rumored to have invested two hundred and twenty million dollars in a Chinese peer-to-peer lending platform. GIC Pte Ltd. is one of many investors in the peer-to-peer platform, which is called Dianrong.

Dianrong will utilize funds from GIC in order to boost automation processes at its branches. Some of the funds are also reported to be earmarked for development, acquisitions and research. News of the investment by GIC Pte Ltd was announced by the worldwide news agency, Reuters.

In case you’re unfamiliar, P2P investment (peer-to-peer investment) happens when borrowers find investors via the World Wide Web. At present, profits from the P2P niche are at a staggering one hundred and twenty billion dollars. This industry is the subject of some criticism and controversy. Some people feel that it puts investors in line for zero profits and sketchy loans!

Right now, the Chinese government is working on a crackdown of P2P business practices. The Chinese federal government is expected to put new regulations into place which are a lot more stringent than existing regulations. This may trigger some fallout. For example, a bigger player in P2P is expected to close up shop because of the upcoming crackdown.

Elements of a crackdown by the Chinese government are already in place. However, more new rules are anticipated. Right now, China is a place where over twenty-one hundred P2P companies do business. For example, Dianrong is owned by a company which also owns a second Web-based lending firm, which earned profits of two hundred and seven million dollars during 2015.

This Industry is High-risk

Risk in this industry is very high. Over the past six years, around thirty-seven hundred platforms for peer to peer lending have gone under. As well, law enforcement agencies within China have charged twenty peer to peer investors for running schemes with Ponzi setups, while pretending to offer practical investment strategies to customers. Arrested investors are also in hot water for bilking investors for more than seven and a half million dollars.

Is P2P Lending a Ripoff?

Some key players in the chief investment industry, including the chairman of Fosun Group, Guo Guangchang, have criticized the entire peer to peer industry for being nothing more than a scam operation. As well, a notable president of a big insurance company (Ping An Insurance) stated openly that the vast majority of lenders with P2P business models were “fake” lenders.

The PM of Singapore, Lee Hsien Loong, is currently the chairman of GIC. This company used to be called the Government of Singapore Investment Corporation.

Clearly, this industry does pay off for some investors. Otherwise, it’s unlikely that a big sovereign wealth fund in Singapore, with a chairman who is a Prime Minister, would pour money into P2P Lending. However, this isn’t a done deal yet. It’s something that’s being talked about, which is likely to happen in the foreseeable future. There’s always a chance that this deal could still fall through.

About the Author

Morris Edwards is a content writer at CompanyRegistrationinSingapore.com.sg, he writes different topics like Wealth investments paying off for Singapore’s big three banks and Citizenship by Investment Programs for an Instant Second Passport and all topics related to Singapore and Business registration in Singapore.

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