(Yicai) May 27 -- CreditEase, one of China's first peer-to-peer lending platforms, has started winding down its quasi-fixed-income products, whose outstanding value is estimated at about CNY50 billion (USD7.4 billion), drawing close attention from investors.

The products had peaked at nearly CNY150 billion (USD22.1 billion) around 2019, a financial advisor who worked at CreditEase for 14 years told Yicai. CreditEase has been shrinking its business in recent years, and its current size is likely between CNY40 billion and CNY50 billion, he told Yicai.

CreditEase is still calculating the data and expects to release an orderly wind-down plan in four to six weeks after the proposal is finalized and reported to regulators, according to a recent company announcement. It will then sign agreements with customers individually.

Founded in 2006, CreditEase was one of the first companies in China to adopt the P2P model and later became one of the world’s largest P2P lending service platforms. As China’s P2P wind-down accelerated between 2018 and 2020, CreditEase said in November 2019 that its P2P platform CreditEase Huimin would stop adding new lending and borrowing services, with existing online lending operations to be managed by Yirendai.

After the restructuring, Yirendai was renamed Yiren Jinke. The company was listed on the New York Stock Exchange in December 2015 and changed its English name to Yiren Digital in 2019, while its Chinese name was rebranded as Yiren Zhike in 2024.

Yiren Digital [NYSE: YRD] fell 14.4 percent on May 22 following the announcement. The stock dropped another 10.6 percent to USD1.43 yesterday and slipped a further 2.1 percent to USD1.40 in pre-market trading today.

Investors Worry About Repayment Terms

Yicai learned from several investor groups that CreditEase’s clients are mainly high-net-worth individuals, most of whom invested more than CNY1 million (USD147,475), making them highly concerned about the repayment plan.

“I invested more than CNY10 million (USD1.5 million) a year and a half ago. I was completely stunned at the clear-out. Now, all I hope for is to be able to get my principal back,” Mr. Chen, an investor, told Yicai.

Under a possible repayment plan circulating in the market, the repayment base would be calculated by deducting cumulative distributed returns from investors’ outstanding balances. In other words, repayments would be made in installments based only on the remaining principal, excluding all historical gains.

“I did the math and found I could get back almost zero of my money if the net principal calculation is adopted,” one investor said. Some long-term rolling investment clients said they might even have to pay money back to the firm under such a formula.

The above-mentioned financial advisor said the quasi-fixed-income products grew out of CreditEase’s former peer-to-peer lending business. As China phased out P2P platforms, CreditEase transformed its business toward microloan facilitation, including vehicle mortgage loans, online loans, and bank-partnered lending.

“As far as I know, the underlying assets of CreditEase’s quasi-fixed-income products include micro-credit loans and financing leases,” he said.

Editor: Emmi Laine