P2P lender Dianrong raises US$40 million

Shanghai's online peer-to-peer lending platform Dianrong said on Tuesday it had received a US$40 million investment from Dalian-based Golden Investment Group.

The injection from Golden, with a registered capital of 4 billion yuan (US$588.2 million) will “improve investor confidence,” according to Dianrong.

The funds will be used in fintech, supply chain finance services and to help Dianrong find more high-quality and reliable assets, said CEO Luo Longxiang.

The funding, much smaller than previous rounds, reflects tightening conditions in the market after several dozen Chinese P2P platforms have recently failed to repay investors on time, with some investors reportedly losing 100,000 yuan to 1 million yuan each.

Some of those P2P lenders are accused misrepresenting yields and using the funds for luxury gifts, salaries and for the platforms’ own finance products, which were not authorized by regulators.

Leading local P2P firms have upgraded their technologies and improved capital structures to deal with the issues, which makes them still valuable, analysts said.

But Dianrong's financing is less than the previous rounds, such as US$291 million in January and US$207 million in 2015.