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Together Funding, 8Percent seek to go public earlier than rivals
By Park Jae-hyuk
Licensed peer-to-peer (P2P) lending platforms here have begun to push ahead with various strategies for survival, including initial public offerings (IPOs), amid difficulties resulting from recent decisions by Kakao Pay, Toss and Banksalad to end their partnerships with the online lending platforms that enable individuals to obtain loans directly from other individuals.
Among the licensees registered as "online investment-linked financial companies," Together Funding and 8Percent are vying with each other to become the nation's first P2P lending platform listed on the stock market.
Together Funding, which won its license on Aug. 26, has sought listing on the tech-heavy Kosdaq market within this year.
After hiring Mirae Asset and Daishin securities as co-underwriters for its IPO in February last year, the P2P lending platform also passed an audit conducted in April by Samil PwC, an auditor designated by the Financial Supervisory Service.
"It seems that the process for our IPO is in the final phase," Together Funding CEO Kim Hang-ju said in a press release. "Following the registration as an online investment-linked financial company, we will be able to make a leap forward to become the leading P2P finance company."
Mirae Asset and Daishin said that Together Funding will successfully enter the Kosdaq market based on a stable growth in its profits.
According to industry officials, 8Percent has also pursued its listing on the Kosdaq market since 2019, hiring Daishin as the underwriter for its IPO earlier last year. The company is one of three companies that became the nation's first licensed P2P lending platforms on June 10.
Although 8Percent has remained cautious about disclosing specifics of its IPO plan, it had been expected to accelerate its efforts to go public, as soon as it wins the license.
"The fact that licensed P2P lending platforms have already passed meticulous screenings by financial regulators is highly probable to have a positive impact on their forthcoming IPOs," an industry insider said.
Daily Funding, another P2P lending platform considering an IPO, failed to obtain its license in August. Terafunding, the leading P2P lending platform in terms of accumulated amount of loans, is also facing difficulties in receiving a license, as the company has been sued repeatedly by one of its users, who claims it committed fraud.
Data from the Financial Services Commission (FSC) showed that only 28 among 237 P2P lending platforms operating in the market in June last year won their licenses as of Aug. 26. The FSC warned that companies that have yet to apply for the license may face shutdowns, according to the Act on Online Investment-Linked Financial Business and the Protection of Users.
"The registration of P2P lending platforms will protect its users, contributing to the industry's credibility and development," an FSC official said.
In the U.S., an online personal finance company, SoFi, successfully went public in June at $8.65 billion valuation, through its merger with a special purpose acquisition company (SPAC), backed by venture capital investor Chamath Palihapitiya.
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On top of the attempts to go public, some of the licensed P2P lending platforms here are trying to attract large-scale investments for their continuous operations.
Lendit, which won its license on June 10, attracted a 50.4 billion won ($43 million) investment from H&Q Korea in July. Peoplefund, which also won its license on June 10, has attracted a combined 66 billion won investment from CLSA Capital Partners.
In addition, P2P lending platforms are going all out to make their own websites and apps more attractive, as they have been unable to advertise themselves on the major fintech apps.
After the financial authorities warned fintech firms of the possibility of the P2P lending platforms' ads on their apps being interpreted as violations of the Act on Financial Consumer Protection, Kakao Pay ended its partnership with Peoplefund and Together Funding, while Banksalad stopped its alliance with HonestFund and Together Funding.
Toss and Finnq apps have not offered services based on their partnerships with P2P lending platforms since earlier this year, because the Toss app operator, Viva Republica, faced lawsuits from hundreds of users, who suffered losses from its affiliated P2P platform provider's deferred redemption caused by borrowers in default.
Market observers also expect P2P lending platforms to capitalize on the tightened loan regulations, given that borrowers seem to be relying more on such platforms that are not subject to regulations on debt-service, loan-to-value and debt-to-income ratios.
