TOKYO -- Japan's Itochu is starting a new online lending service, aiming to match people who need small loans with parties willing to provide cash. The goal is to accommodate demand for funding in various markets, including emerging ones.
The trading house recently paid 200 million yen ($1.67 million) to acquire an 18% stake in Crowdcredit, which runs a so-called social lending platform. Itochu intends to collect money from Japanese individual investors and lend it to smaller companies and individuals overseas. It is the first major Japanese trader to get involved in the business.
In social lending, also known as peer-to-peer lending, companies and individuals that need funding declare their required amount and what they plan to use it for. The money only changes hands if investors are willing to accept the suggested yields and risks.
Itochu is now the second-largest shareholder of Crowdcredit, which will solicit investors and supply funds to borrowers. The trader intends to launch the service in Italy, Spain and Finland in addition to Latin American emerging countries such as Peru, where Crowdcredit already operates. Itochu will also get its U.K. financing subsidiary involved; the plan is to lend a total of 100 billion yen in 2018.
Social lending has been spreading in the U.K. and the U.S. since around 2005. It has yet to truly catch on in Japan. Only Crowdcredit, which was established in 2013, and four other companies are believed to be fully engaged in social lending in Japan.