Chinese ride-hailing giant Didi Chuxing is expanding into consumer finance following other industry leaders including Xiaomi Corp. (OTC: XIACF; HKEX: 1810).
The company, which is reportedly deliberating between Hong Kong and New York as the destination for its initial public offering, has just purchased a second-largest stake in Bank of Hangzhou (Hangyin) Consumer Finance. As reported by Yicai Global, the China Banking and Insurance Regulatory Commission granted permission to Didi’s entity Dirun Tianjin Technology on Friday as it invested an estimated 1.3 billion yuan ($197.8 million) in Hangyin, doubling the finance firm’s registered capital.
The largest stake in Hangzhou-based Hangyin is still held by Bank of Hangzhou, while its stake declines to 35.1%, as China Economics Review reported. Dirun will hold 33.3% in Hangyin upon closing of the deal. China Yintai Holdings is another stakeholder in the company.
Amid a major crackdown on peer-to-peer lending over the past few years, China’s regulators have granted more consumer finance licenses to some top internet companies. Among them was electronics giant Xiaomi, which launched Xiaomi Consumer Finance in January 2020. Tech giant Baidu (Nasdaq: BIDU; HKEX: 9888) and Sina Corp., which went private last week after trading on the Nasdaq for 20 years, also delved into the sector over recent years, taking advantage of the P2P lending closures.
Yicai Global notes that intensified competition from online financing platforms led many offline providers to merge with online businesses to combine their advantages.