(WSJ) One of China’s largest financial-technology companies, Lufax Holding Ltd., is planning an initial public offering in the U.S., even as some other Chinese companies are opting to sell stock closer to home.
Lufax, which operates online investment and lending platforms, on Wednesday filed to list American depositary shares on the New York Stock Exchange. It didn’t disclose any fundraising details and used a placeholder $100 million sum to calculate its registration fee.
The company plans to list by the end of October, people familiar with the situation said. The timing is meant to avoid any market volatility sparked by the U.S. presidential election on Nov. 3, one of the people said, adding that its target is to sell about $3 billion of stock.
With a U.S. listing, Lufax is targeting what it sees as a more sophisticated and specialized investor base for fintech, this person added. In contrast, its bigger peer, the Alibaba Group Holding Ltd. -backed Ant Group Co., is planning concurrent listings on the Hong Kong stock exchange and on Shanghai’s nascent STAR Market.
This could be the biggest Chinese IPO in the U.S. since Alibaba’s $25 billion debut in 2014, Dealogic data shows. The next-largest such share sale was by KE Holdings Inc., an online real-estate brokerage that went public in August and raised $2.44 billion.
U.S. politicians have threatened to step up financial scrutiny of Chinese firms, a process that could lead to possible delistings, and some Chinese companies have recently obtained secondary listings in Hong Kong.
Shanghai-based Lufax was valued at $39.4 billion in early 2019, after it raised $1.4 billion of funding, according to filings by Ping An Insurance (Group) Co., the giant insurer that is a major shareholder in the company. It is the world’s fourth most valuable unicorn, or $1 billion-plus startup, according to a report this year by Hurun, a China-based research firm.
Lufax made $1.0 billion of net profit in the first half of this year, on revenue of $3.6 billion. As of June, its wealth-management clients held $53 billion of assets, and individuals had $73.5 billion of loans outstanding that had been enabled by its platforms. Those figures made it China’s third- and second-largest nontraditional provider of online wealth management and retail credit, respectively, according to analysis from consultants Oliver Wyman cited in its listing document.
Lufax had previously considered listing in Hong Kong. In 2016, its chief financial officer told reporters that it was gearing up for an IPO in the city potentially by the end of 2017.
Lufax was once a major player in peer-to-peer lending but has reinvented itself after China cracked down on the industry, which saw scandals and a wave of public protests in 2018. Shares of U.S.-listed peer lenders such as Yiren Digital Ltd. and Qudian Inc. have tumbled.
Last year, Lufax stopped offering peer-lending products, and stopped taking funds from small investors to back loans to other individuals. By June, peer-lending products had fallen to 12.8% of total client assets, and no new loans this year were funded by peer-lending investors, its listing document said. Loans are now funded by banks and others.
Units of Goldman Sachs, Bank of America, UBS, HSBC and Ping An are the main underwriters for the IPO. Lufax will use the ticker LU.
Source: Wall Street Journal by Joanne Chiu