Another one of China’s online lenders has shut up operations following a crackdown on the P2P lending sector launched by Chinese regulators in 2019.
On 31 May Weidai (微贷网) announced via its official WeChat account that it was withdrawing from the online lending sector prior to 30 June 2020 and will no longer be engaging in online loan intermediation operations.
Weidai said that the decision was prompted by “state policy and industry trends,” while also highlighting the impacts of the COVID-19 outbreak in the first quarter of 2020.
In response to requests from lenders all of Weidai’s asset management plan agreements will be terminated on the evening of 9 June.
Weidai previously made adjustments to its operating model on 18 February 2020, shifting its focus towards after-loan collection and recovery of funds to ensure repayments to lenders.
Weidai first commenced operations in 2011, and listed on the New York Stock Exchange in November 2018.
The company’s controlling shareholder is Tao Hong (姚宏) who holds 60.11% of equity in the company, while Hakim Unique Internet (汉鼎宇佑) holds a 15.54% stake via a wholly owned subsidiary, and Deqing Mianxiu Guanli Zixun Partnership Enterprise (德清锦绣管理咨询合伙企业) holds a 13.19% stake.
As of February 2020 Weidai’s loan balance was 8.573 billion yuan, while cumulative loan funds were 298.663 billion yuan.
According to its 2019 financial report Weidai saw net revenues of 3.358 billion yuan, for a YoY decline of 14.21% on the back of a decline in fee revenues for lending services.
Net profits were 263 million yuan in 2019, for a YoY plunge of 56.52%.
The move comes just after Shenzhen-based Xiaoniu Online (小牛在线) announced via its offical website on 9 May that it would be withdrawing from online lending operations.
Chinese authorities launched a crackdown on the country’s heavily beleaguered P2P and online lending sector in 2019, following the emergence of widespread scandal and fraud.
As of March 2020 only 139 online lending entities were still operating in China, for an 86% drop since the start of 2019. China’s P2P lending sector was host to over 7,000 platforms in total at the peak of its popularity.