Entrepreneurs Soul Htite and Kevin Guo are handing over their duties as co-chief executives of Dianrong as the fast-growing Chinese online lender looks to make itself more attractive to investors ahead of an expected public listing.
Htite will become Dianrong's executive chairman, overseeing "strategic planning and growth activities", while Guo is named co-chairman with a focus on advancing "government and industry relations".
In a well choreographed move, former Standard Chartered banker Loh Long Hsiang, previously chief operating officer, steps up to CEO, the company said in a statement on December 7.
It's common for companies to make changes to their management structures before an initial public offering as they add names well known to investors to build confidence and round out their management teams to avoid key-man risk -- a company's over-reliance on just one person. Dianrong's IPO is long anticipated and a listing in 2018 now seems even more likely.
The moves follow a $220 million Series D funding round in August led by Singapore sovereign wealth fund GIC.
It also comes against a backdrop of increased regulatory scrutiny for China's lenders. In November, the People's Bank of China announced restrictions on so-called micro-lending that sent the shares of US-listed micro-lenders tumbling.
On December 1, the PBoC and China's banking watchdog moved to clear up micro-lending further by deeming unlicensed platforms with high interest rates and abusive debt collection methods as illegal. The move is expected to clean out illegal players to the benefit of larger, legitimate operations.
While it has explored micro-lending, Dianrong focuses on offering loans and selling investment products to small and medium-sized enterprises and individuals.
Perhaps with the regulatory environment at home in mind, Dianrong said Htite's new role would include "identifying new strategic fintech partnerships across Asia-Pacific".
"Kevin and I started Dianrong five years ago with a handful of people in Shanghai and a vision for marketplace lending in China," Htite said in the statement. "Today, Dianrong has thousands of talented employees all across China who offer a full-suite of fintech solutions for [small and medium-size enterprises] and individuals. It’s been an amazing journey so far and we’re only just beginning to realise this company’s true potential.
“In order to write the next chapter in the Dianrong’s growth story, Kevin and I decided that we needed to hand over the daily operational responsibilities to a new CEO. We’re very fortunate that person is our own Long Hsiang Loh, who has helped us develop and execute our current strategy.”
The next stage in Dianrong's growth is expected to be an IPO. Htite told FinanceAsia in 2016 that a listing was possible as early as 2017.
In July, as Dianrong announced the acquisition of Quark Finance's asset-origination operations, Htite said the company was keeping its options open, including the possibility of an IPO. However, he stressed, the company was "really well funded" and hailed the deal for Quark as a landmark for the peer-to-peer sector as the first case of a “marketplace lender acquiring assets from another lender in either China or the US.” This, he said, was a sign of the sector's growing maturity.
And that was before the latest funding round closed in early August. Alongside GIC, investors here included China's CMIG Leasing, Korea's Simone Investment Managers, and other institutions and individuals.
Other investors have included Standard Chartered Private Equity and Tiger Global Management.
"With the recent $220 million Series D round funding secured and continued business expansion and product innovation, we believe Dianrong is well-positioned for continued growth and success under Long Hsiang’s leadership," Guo said in the statement.
"We are confident that his unique combination of traditional finance experience and fintech know-how will ensure continuity and consistency in Dianrong’s business operations.”
IPO experience
Htite is one of the world's most high-profile advocates for the peer-to-peer lending industry. He was a co-founder of San Francisco-based LendingClub.com, which pulled off the biggest tech IPO of 2014 in the United States.
Htite had left Lending Club in 2011 to co-found Dianrong with Guo, a Shanghai-based former lawyer.
Dianrong recruited Singapore-born Loh from Standard Chartered in January 2016, one of a number of high-profile bankers to make the switch to the fintech sector.
Initially serving as COO, he was responsible for daily operations and management, as well as helping the company improve its operations and establish more effective management and incentive mechanisms.
He handed over the COO duties in April this year to Xuxia Kuang, previously chief financial officer. Kuang, in turn, was replaced by Yawen Cui, previously CFO of Ali Sports and AllTech International Group.
"His extensive experience managing initial public offerings, mergers and acquisitions and financial reporting will also help Dianrong explore opportunities within the capital markets," Htite said of Cui at the time.
Loh remained a member of the executive team but without a specific portfolio until his appointment as CEO.
