Alibaba Finance, the financial affiliate of Alibaba Group, plans to spearhead a foray into the P2P industry by investing $35 million in P2P lending platform Ppdai, according to people familiar with the matter (report in Chinese).
Although neither of the companies has confirmed the news yet, Chen Dawei, head of Alibaba Small and Micro Financial Institute, previously said that Alibaba will explore P2P industry when the default rate of this sector is lowered.
“There is no restricted zone for us, and our top priority is to cater for the needs of micro and small enterprises” said Peng Lei, CEO of Alibaba Finance, last week.
Ppdai has established a dedicated department for the lending services of Taobao retailers. Since the turnover generated by this department accounts for more than 30 percent of Ppdai’s total, it may serve as a connection point for the integration of data and business of the two companies.
Launched in 2007, Ppdai is China’s first social lending site, claiming round 2 million registered users. The company’s turnover is expected to exceed 1 billion yuan ($163.06 million) this year. Ppdai has received $25 million of Series A financing from Sequoia Capital in last December.
Triggered by the Internet finance mania led by Yuebao, P2P lending comes under spot light as one of the development directions for financial innovation. But it is haunted by a raft of problems, such as lack of regulation and high default rate. Similar domestic companies include Dianrong, CreditEase, Rong360, Haodai, among others.
This story originally appeared on TechNode.