DT Asia Investments Limited (NASDAQ: CADT; CADTW; CADTU; CADTR) and Adrie Global Holdings Limited (DBA as China Lending Group, have joined together to create China Direct Lending Corporation. Following the closing of the arrangement, the new entity will trade under the ticker of CDLC.
China Lending has been operating as a direct non-bank lender that that serviced MSMEs, farmers and other underserved segments of the economy. The company is headquartered in Urumqui the capital of the Xinjiang Autonomous Region and claims registered capital of $94.2 million as of September 30th, 2015. China Lending said it had $1334.7 million in outstanding loans as of September.
CEO of DT Asia, Stephen Cannon, stated;
“Since our IPO, we actively searched for an acquisition target with a unique but established business, reputable track record of historical growth, and a management team with a disciplined approach and strong commitment to creating long-term shareholder value. China Lending Group’s management commitment to maintain strong risk control business practices by focusing on high-quality, fast-growing MSMEs and sole proprietorship companies resulted in a 79.5% increase in total loans as of September 30, 2015 vs. 2013 year end and near zero non-performing loans for 2014 and the nine months ended September 30, 2015. We believe that China Lending Group’s low risk approach, its high growth and high margin business represents a very attractive opportunity for our shareholders. We look forward to being actively involved in assisting China Lending Group to reach its goals.”
The newly formed company will be the “first” publicly listed company in western China providing access to capital for small business.
Under the terms of the agreement, shareholders in China Lending Group will receive 20 million new shares of DT Asia. A dividend policy was also put into place.
The combined group listed development of peer to peer lending, consulting and credit analysis, and expansion into major financial centers as opportunities for growth.
Management explained that finance in China has largely been the dominion of large banks that have been designed to finance state owned industry. This has led to a funding voide for smaller and emerging companies. Recently announced regulations for the peer to peer industry will create higher barriers to entry. The currently fragemented sector may provide opportunities for further consolidation.