Chinese P2P lender Senmiao Technologies Files For $14 million IPO
China-based Senmiao Technologies Ltd. has filed for an initial public offering in New York, according to a prospectus filed with the Securities and Exchange Commission.
The Chendu-based company disclosed it intended to raise as much as $14.6 million by selling 3.25 million shares at between $4 to $4.50 per share. It plans to list on the Nasdaq under the symbol "AIHS."
Founded in 2014, Senmiao is an online lending platform connecting Chinese investors with individual and small- to medium-sized enterprise borrowers and creditors. The company is still at a very early stage, with only $152,538 in sales for the last three months of 2017.
As of Dec. 31, Senmiao had facilitated direct loans and assignment of loans with an aggregate principal of more than 427 million yuan ($67.8 million), and had an aggregate of 39,364 registered users and a total of 3,364 investors, 1,936 borrowers. Two creditor partners, it said, had participated in loan transactions through the platform.
Leveraging Close Relationships with the Direct-Selling Industry
Senmiao is among latest companies seeking to break into the intensely competitive P2P lending business. There are more than 2,000 peer-to-peer lending companies in China and approximately 40 lending platforms in Sichuan province. To attract more clients, some small- to medium-sized platforms hire thousands of people to hand out leaflets in the shopping malls. This risk is that the resulting costs for customer acquisition can often exceed the customer's lifetime value.
However, Senmiao is attempting to capitalize on a way to bypass the costly client acquisition fees.
Senmiao aims to position itself as a leading online lending platform for the direct-selling industry. According to the company's filing, Senmiao is collaborating with Resgreen Health Science & Technology Group Co., a direct-selling company based in Changsha, China, with over one million users. Through Resgreen Group's referrals among the 400 agents who have used the service, Senmiao's platform acquired approximately 22,600 new users from March to December last year.
With the increase in the number of new users from the partnership with Resgreen, Senmiao is seeking to enjoy low marketing expenses as compared to traditional user acquisition channels as the company has been able to market the platform to a large number of potential users rather than randomly approaching people in a shopping mall.
Will U.S. Investors Welcome Another FinTech Company from China?
The question for the company is whether yet another initial public offering from a financial technology company can succeed here. An IPO from an industry giant like Ant Financial? Sure. But from a small lending platform like Senmiao? The answer is not clear.
Most newly listed small peer-to-peer lending companies have suffered a fall in stock price over the past several months as investors feared tighter regulations from the Chinese government could hurt the overall industry.
Qudian Inc. (NYSE: QD), a provider of online consumer credit in China, saw its shares drop by more than half since its listing. Even two big share repurchase programs couldn't save the stock price from falling. Also, shares of PPDAI Group Inc. (NYSE: PPDF) have lost half their value since the company's IPO, and stock price of Hexindai Inc (Nasdaq: HX) has fallen more than 20 percent in the past three months despite its rapidly growing financial results.
Overall, compared to those competitors already listed, Senmiao is much smaller so it remains an open question as to how warmly the initial offering might be welcomed. It might be why the offering, which was first filed with regulators back on July 25, 2017, has not yet gone forward.
Whether or not Senmiao's offering can be a fundraising success, for some, according to past comments from Xinming Zhou, chief executive officer of Hexindai, merely being listed on a U.S. exchange carries its own value from the trust and reliability that being a publicly listed company can generate.
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