Yirendai IPO Fizzles

China-based online peer-to-peer loan marketplace Yirendai Ltd. (NYSE: YRD) priced its initial public offering (IPO) at $10 per American depositary share (ADS), the midpoint of the expected range. But by the noon hour Friday, shares had dropped 12.5% to trade at $8.75.

Yirendai said it facilitated over $1.376 billion in loans from its inception in March 2012 through the end of September 2015.

Leveraging the extensive experience of parent company CreditEase, Yirendai addresses a largely underserved investor and individual borrower demand in China. The idea behind Yirendai is similar to U.S.-based LendingClub Corp. (NYSE: LC): an online marketplace that connects would-be borrowers to potential lenders. But LendingClub, which came public in December of 2014, has lost 50% of its value since then, and those are footsteps that Yirendai would prefer not to follow.

The Chinese company sold 7.5 million ADSs, raising $75 million at an implied market cap of $1.15 billion. Each ADS represents two ordinary shares.
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Joint bookrunners for the offering were Morgan Stanley, Credit Suisse and China Renaissance. Co-manager is Needham. The underwriters have a 30-day option on an additional 1.125 million shares.

ADSs had slipped to down 13% at $8.70 halfway through the noon hour. About 4.5 million shares had traded hands so far.