CreditEase, US firm team up

The trading value of China's booming peer-to-peer platforms hit 250 billion yuan for the whole of 2014, doubling 2013's statistics. [Photo Provided to China Daily]

CreditEase Corp, China's leading microcredit and wealth management company, said on Friday that it has inked an agreement with the Wellington Management, the global asset management company, to expand its global reach.

The two companies will set up a fund that will mainly invest in pre-IPOs (initial public offerings) of US companies. CreditEase customers will provide the capital for the fund, while US-based Wellington will manage the investments. Though CreditEase did not reveal the exact size of the fund, it said it would run into some "tens of millions of dollars".

"The strategic cooperation with Wellington Management is in line with market demand and our strategy," said Hou Lin, senior vice-president of CreditEase.

The investable funds of private investors from China is expected to reach 114.5 trillion yuan ($18.44 trillion) by the end of this year and their demands for wealth management will be diversified, said a report jointly prepared by financial information provider Forbes and CreditEase.

According to Hou, CreditEase has set up a "1 plus 3" strategy which means they will provide their high-net-worth clients with peer-to-peer lending products, as well as help them allocate assets abroad, and have investments in private equity and stock markets.

P2P financing involves lending money to unrelated individuals, or peers, without the use of a traditional financial intermediary such as a bank.

Hou said CreditEase is stepping up its globalization pace and adding teams in Hong Kong and Singapore. In addition, it will hire more professionals in the United Kingdom, Australia and the United States, to enhance their capabilities of covering all mainstream markets.

According to Hou, the company will launch products with Wellington Management in the property and stock markets at an opportune time.

"It is important for us because we are paying attention to the Chinese market and CreditEase's understanding of local investors combines well with our investment expertise," said Ray Helfer, head of Asia Pacific at Wellington Management.

Helfer said they set up the pre-IPO fund because many US firms with high growth prospects delay their IPO plan due to the strict regulatory requirements in the US. These companies need funds to support their development and turn to companies like Wellington Management for equity investments before going public.

Helfer said Wellington Management is conducting extensive research and investment on several Chinese companies, and may soon set up a pre-IPO fund focused on the Chinese market. He said that healthcare and property markets look the best bets in China from a long term perspective.