One of China's leading marketplace lenders has raised $220 million to fuel regional growth

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Dianrong, one of China's leading marketplace lenders, continued the country's megaround trend this week by raising $220 million in a Series D round led by GIC Private Limited, Singapore's sovereign wealth fund.

CMIG Leasing, a subdivision of China's largest private investment conglomerate Minsheng Investment, South Korean fund manager Simone Investment, and other institutional and private backers also participated. The funding will go toward automating branches of Dianrong's lending business, R&D projects, acquisitions at home and abroad, and expanding in Asian markets including Indonesia, Singapore, Hong Kong, Taiwan, Vietnam, Malaysia, and Cambodia, according to the company's co-CEO, Soul Htite. It seems Dianrong is wasting no time, as Htite disclosed that it has already begun talks with firms in these markets.

Here's why Dianrong's plans could have a major impact on Asia's fintech scene as a whole:

• It has experience absorbing smaller fintech players. Dianrong acquired Shanghai-based Quark Finance's lending business in July, adding 71 branches across 47 cities to its domestic presence. The move was designed to boost origination volumes on Dianrong's platform. Given the company's intent to search for M&A opportunities in other Asian countries, it's likely to begin similar purchases beyond its home market soon.
• It has already begun pushing into other lines of business. The lender moved into supply chain finance in March by teaming up with FnConn, a subsidiary of Taiwanese tech giant Foxconn that offers loans and financing solutions, to launch Chained Finance, a blockchain-based supply chain finance platform. Dianrong's vast resources and brand recognition give it a major advantage in any new sector it enters, and as such, it may find it easy to crowd out smaller competitors, even in business lines unrelated to its core operations.
• It has experience moving into new markets. Dianrong already has a partnership with financial services conglomerate Hanwha Group to extend marketplace lending and other financial services to customers in South Korea, and it recently launched an investment platform in Hong Kong to give Asian investors access to US consumer loans. This means it already has expertise in navigating other countries' regulatory hurdles, and would probably find it fairly easy to establish a foothold in most Asian markets.

The success of giant Chinese companies is leaving smaller fintechs with few options. The pace at which China's largest fintech companies are amassing money and scale, and moving into new financial services niches, is making it increasingly unrealistic for smaller Asian fintechs, both in China and regionally, to seriously compete. Moreover, business from these titans is valuable, so most governments would be unlikely to turn them away if they wanted to enter their jurisdictions. In short, this suggests Asian fintech startups will have to make themselves attractive acquisition, or at least partnership, targets if they hope to survive, meaning we may soon see major consolidation in the Asian fintech market.

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