Lu Jinsuo came to the co-chairman, can the executives stand on three feet and go to a "new level"?

On the one hand, the regulatory policy of online lending is unclear; on the other hand, the transformation path is unclear, making the IPO process difficult to determine. The joining of Ji Guangheng indicates that while strengthening the senior management team of The Landing Gold Institute, it is making every effort to break through the challenges and achieve transformation and upgrading

Ji Guangheng

Text | "Finance" reporter Zhang Yingxin

Edit | Yuan Man

"Lu Jinsuo has a new 'director.'" On April 2, some industry insiders close to Lu Jinsuo said so in the WeChat circle of friends. The "Caijing" reporter noted that the new "director" in the person's mouth is Ji Guangheng, the former vice chairman of Baoneng Group. Before joining Baoneng Group, Ji had many years of experience in the banking field.

On the same day, Lujinsuo Holdings Limited (hereinafter referred to as "Lujinsuo Holdings"), a subsidiary of Ping An Group (601318.sz), announced that Ji Guangheng had joined the company as co-chairman, party secretary and director of the executive committee. According to informed sources close to Lujin Holdings, in the future, Ji Guangheng will be fully responsible for the company's operation and management, strategic transformation and development; Chairman Li Renjie will be fully responsible for the board of directors and overall coordination management; CEO Ji Kuisheng will focus on financial technology, digital wealth management platforms and international markets.

At the flick of a finger. Shanghai Lujiazui International Financial Asset Exchange Market Co., Ltd. (hereinafter referred to as "Lujinsuo"), which started as an online loan business in 2011, has gradually turned into a financial technology company providing comprehensive services through iteration due to the influence of the industry environment and its own business development needs in recent years. However, the industry situation is changing, the transformation challenges are continuous, and the market is generally concerned, can the addition of Ji Guangheng promote lujin holdings to "go to a higher level"?

Financial "veteran" becomes "director"

According to public information, after graduating from Peking University, Ji Guangheng worked in Shanghai Banking Real Estate Development Company and Industrial and Commercial Bank of China (hereinafter referred to as "ICBC"), and later served as vice president of Shanghai Pudong Development Bank, secretary of the party committee and chairman of Shanghai Rural Commercial Bank, and vice chairman and co-president of Baoneng Group.

It is understood that during the 15 years of his employment at ICBC, Ji Guangheng served as president of chang'an sub-branch and vice president of Beijing branch, and was known as the youngest branch-level cadre of ICBC that year.

In 2009, through global recruitment, Ji Guangheng became the vice president of the head office of Shanghai Pudong Development Bank, and during his 7 years in office, his public business has always been the vanguard of the national joint-stock banks. During this period, Ji also served as the president of the Beijing branch for 3 years, and once raised the comprehensive performance of the branch to the forefront of the bank. At the end of 2015, Ji Guangheng became the chairman of Shanghai Rural Commercial Bank, during which time the bank's total assets and net profit continued to achieve double-digit rapid growth.

Industry insiders evaluate it as having rich experience in the operation and management of the financial industry and diversified industrial groups, with excellent business capabilities and team management capabilities. Some practitioners also said that he acted vigorously and innovatively.

According to informed sources close to Lujin Holdings, after Ji Guangheng joins, the management of Lujin Holdings will form a management core similar to the executive committee of Lujin Holdings, and achieve a deeper, more comprehensive and clearer matrix management of each line. In the future, Ji Guangheng will be fully responsible for the operation and management, strategic transformation and development of Lujin Holdings, Li Renjie will be fully responsible for the board of directors and overall coordination management, and Ji Kuisheng will focus on financial technology, digital wealth management platform and international market.

Lu Jin Holdings has high expectations for Ji Guangheng's joining. It said that the addition of Ji Guangheng will further enhance the strength and vitality of the senior management team controlled by Lujin. Under the leadership of the three executives, Lukkin Holdings' leading position in the global fintech field will continue to be strengthened.

Iterative transformation

Founded in September 2011, LuJin Institute first started with the online loan business and was once regarded as a benchmark in the online loan industry. However, in recent years, with the tightening of supervision in the online lending industry and the need for its own business expansion, Lujin has iterated on its own business framework.

It is understood that the change of its business model can be roughly divided into four stages: 2011-2013, which belongs to the online lending platform and online operation stage, known as the 1.0 era; 2013-2015, it has become an open platform for cross-industry operation, known as the 2.0 era; after 2015, it no longer specializes in p2p business and turns to an integrated wealth management platform, which is the 3.0 era; after 2018, it is known as the 4.0 era for deepening the application of financial technology.

In the 1.0 era, the core business of Lujin is mainly based on the general trend of Internet mobility to develop users' online financial management habits, and the essence is the Internetization of financial products. However, with the emergence of the balance treasure in 2013, the era of national financial management is coming, "openness" and "cross-industry" have become the development trend of the industry, and Lu Jin has also begun to make preliminary explorations.

In 2015, Lujin upgraded from a single online loan business, took advantage of the online channel advantages of the Internet, cooperated with various traditional financial institutions, and built an open and comprehensive trading platform. "In the 2.0 period, Lujin Institute began to contact more banks, trusts, securities and funds, spanning nine major markets, 9 product lines to create a one-stop online wealth management platform, and provide more high value-added services across industries." Ji Kuisheng once said.

Entering the 3.0 era, the trend of Internet finance sub-industry operation is becoming increasingly obvious, and the reshaping of Lujin Institute has begun in response to compliance and other requirements. According to ping An Group's 2016 annual report, Lujin Holdings completed the restructuring of inclusive financial business and heavy financial firm business in that year, forming a strategic layout of "three institutes and one benefit" of its lufinil, heavy gold, former stock exchange and inclusive finance, and comprehensively laying out wealth management, inter-institutional transactions and consumer finance.

Caijing reporter noted that on December 13, 2016, the official website of Lujin Institute issued an announcement that according to the Interim Measures for the Management of Business Activities of Online Lending Information Intermediaries (implemented in August 2016) and related regulatory provisions, from now on, Shanghai Lujin Internet Financial Information Service Co., Ltd. (hereinafter referred to as "Lu Financial Services") will act as an online lending intermediary to provide lenders and borrowers with services such as information collection, information disclosure, credit assessment, information exchange, and loan matching. The online lending intermediary services provided by the former Shanghai Lujiazui International Financial Assets Exchange Market Co., Ltd. (i.e. "Lujinsuo") will continue to be provided by the Lujin service platform.

In other words, under the new structure, Lujin is controlled by Lujin. The subsidiary of Lu Jin includes several independent businesses: p2p business Lu Financial Services, asset management business Lu Fund (with fund sales license), international business Lu International (Singapore) and so on.

It is worth noting that during the period of rapid business expansion and adjustment, the financing of Lu Jin is also proceeding at the same time. According to the investigation, in January 2016, Lujin completed a series B investment of US$1.216 billion, with the participation of Guotai Junan Securities, Minsheng Bank and Bank of China Group; previously, in March 2015, Lujin completed a financing of US$485 million, with a valuation of nearly US$10 billion. At the beginning of the establishment of Lu jin, its angel round was led by Ping An Group of China and invested by Morgan Stanley, which was completed in December 2014.

During the period, Lujin not only faced executive adjustments, but also was exposed to be spin-off and listing. According to incomplete statistics, from its establishment in September 2011 to 2016, Lu Jin has changed 4 general managers, and 7 deputy general managers have left in 2015 alone.

At the same time, in May 2014, the market reported that Lujin would be split and listed, with a valuation of up to 100 billion yuan. In December 2015, Lu Jin's chairman Ji Kuisheng responded for the first time that Lu Jin would be listed in Hong Kong as soon as the second half of 2016, with a valuation of about US$18 billion. Since then, the market has continued to be windy, but Lu Jin has not responded positively.

Until March 2019, at Ping An Group's 2018 annual results conference, Chen Xinying, co-CEO of Ping An Group, said that after Lu Jin completed the C round of financing, there is currently sufficient capital and there is no urgent IPO pressure. According to Ping An Group's 2018 annual performance report, its subsidiary Lujin Holdings has completed a series C financing with a post-investment valuation of US$39.4 billion.

Historical challenges

According to a number of industry sources, the reason why Lujin Holdings has not been listed is that on the one hand, the regulatory policies of online lending are unclear and whether the relevant business is compliant; on the other hand, the transformation path is unclear, making it difficult to determine the process of IPO.

Previously, on July 18, 2019, there was news in the market that Lujin would withdraw from the p2p business and that "Lujin may obtain a consumer finance license". At that time, the official response of Lujin was that lu financial services p2p business was actively responding to and cooperating with the regulatory "three drops" requirements, and the existing products and customers' rights and interests were not affected.

Immediately after October 24, 2019, Ping An Group issued an announcement that the company intends to establish a national technology-based consumer finance company as a joint venture, and the relevant matters have yet to be implemented in the relevant regulatory approval procedures.

In recent years, with the continuous development of special rectification of mutual fund risks, liquidation and transformation have become the main theme of the online lending industry. Some insiders said bluntly that Lu Jin's choice to withdraw the p2p business is reasonable, and Ping An Group's application for a consumer finance license may be to complete the p2p transformation, which is consistent with the direction of supervision and guidance for the transformation of online lending institutions to licensed financial institutions.

According to an informed source close to Ping An Group, after Ping An obtained the consumption license, one of the transformation ideas was based on Lu Jin, which was integrated into a consumer finance platform and incorporated related consumer finance businesses. In this regard, neither Ping An Group nor Lujin Holdings responded positively.

However, a realistic question is, in the case of unclear transformation path, how should the existing business of Lujin's online loan and other businesses be effectively resolved? Ping An Group's financial report shows that as of the end of December 2019, the balance of loans under management by Lujin Holdings was 462.243 billion yuan, an increase of 23.3% over the beginning of the year. According to the official website of Lu Financial Services, as of June 2019, the balance of online loan business loans was 98.4 billion yuan.

For the new successor Ji Guangheng, how to adapt to the situation and lead Lu Jin's holdings to "go to a higher level" will be a major challenge.

(Caijing reporter Yu Yan also contributed to this article)

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