CLPS Moves Deeper Into Lending by Increasing Stake in Lihong; Stock Rises 2%
Shares in CLPS dipped 8 percent in the morning but recovered by the afternoon after it said it will increase its stake in the lending business.
CLPS Inc. (Nasdaq: CLPS) announced today that it will increase its ownership in Lihong Financial Information Services Co. Ltd. from 2.7 to 36.8 percent, sending the Shanghai-based company's shares on a brief plunge in the morning, before they reversed course and recovered midday.
The information technology and consulting company said in a statement Tuesday that with this move, it is betting on China's growing consumer lending, in which Lihong has been one of the major players.
"In line with the CLPS's development goals, the increased investment will further diversify its revenue model into new business services, is anticipated to add to the Company's ability to generate additional operating income, and to further support the Company's ‘dual engine' strategy," the IT solutions provider stated.
In response to the news, the stock of CLPS dipped 8 percent in early trading. In the afternoon, however, it was trading more than 2 percent above yesterday's close, at $7.60 per American depositary share.
CLPS first made its investment in Lihong six months ago. The company did not specify the expected date of the closing of the new deal.