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Alibaba Aims For $160 Billion In P2P Loans In China

Alibaba Group’s finance arm is working to create a marketplace for 1 trillion yuan ($163 billion) of person-to-person loans by 2016, and is already almost 15 percent of the way there after less than six months, the P2P lending unit’s CEO said on Tuesday (Sept. 23).

In April the Chinese ecommerce giant launched Zhao Cai Bao, which lets small businesses and individuals borrow from investors directly and has already created a 14 billion yuan ($2.3 billion) marketplace, according to CEO Yuan Leiming, speaking at the Hong Kong Institute of Bankers conference. Zhao Cai Bao plans to attract 1 million investors for P2P loans by the end of 2014, he said.

The money for each loan comes from a maximum of 200 investors after a bank has vetted the loan and guaranteed that the money will be paid back. Zhao Cai Bao has listed about 11,000 products, and the company says the annualized return on a loan for a period of six to 12 months is at least 5.5 percent, Bloomberg News reported.

A group of more than 40 banks screens potential loans for risk and guarantee the credit. Average loan size is been about 70,000 yuan ($11,400). There is no maximum for how much an individual can invest, while the minimum usually depends on the loan size and the number of investors.

Alibaba has indicated in a filing with the U.S. Securities and Exchange Commission that its finance arm — which includes a small-business lending unit, a money-market fund, and the Alipay payments service — could conduct its own IPO in the future, with an expected equity value of at least $25 billion.

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