Microlender Qudian Eyes $1 Billion New York Listing, Source Says

(Beijing) — Online microlender Qudian has made initial private filings for an initial public offering (IPO) to raise up to $1 billion, a source close to the company said on Monday.

The IPO could become the largest New York offering by a Chinese internet company since Alibaba Group Holding Ltd.’s record-breaking listing in 2014.

Qudian expects to make its first public filings for the offering within the next three months, with an aim of raising $800 million to $1 billion in an IPO by June, said the source with direct knowledge of the situation, speaking on condition of anonymity.

The company began its life as Qufenqi, a provider of microloans to students for purchases like smartphones and other electronic devices. It later got out of that business due to controversial collateral demands imposed on some borrowers, but remains in the microlending space, with consumer loans that still average around 1,000 yuan ($145).

Such amounts typically account for as much as half or a third of a person’s monthly salary in China, and in more mature Western markets might typically be financed through credit card purchases paid back in installments. But most Chinese lack access to such cards or other sources for small loans, allowing companies like Qudian to thrive.

The company facilitated 33 billion yuan in loans last year, and expects the figure to more than double to over 80 billion yuan this year, the source said. Most of the loans are due in relatively short order, typically within a month.

The upcoming IPO is being underwritten by Morgan Stanley, Citigroup, Credit Suisse and CICC.

One of Qudian’s highest-profile investors to date is Ant Financial Services Group, the former financial arm of e-commerce giant Alibaba, which itself is eyeing a potential IPO in Hong Kong as soon as this year. Qudian and Ant Financial are part of a new generation of private financial-services companies to spring up over the last decade, as China slowly opens the market to a sector that was previously monopolized by big state-run companies.

Other similar companies looking to make IPOs over the next year include Lufax, a leading peer-to-peer lender, as well as Qudian rival Fenqile.

If Qudian succeeds in its offering, it will be the largest by a Chinese internet company in New York since Alibaba’s $25 billion listing in 2014. The sector has produced few blockbuster IPOs since then, with a growing number of Chinese firms opting to list at home where they can get higher valuations. Parcel delivery firm ZTO Express raised $1.4 billion in a New York IPO in October.

Contact writer: Yang Ge (geyang@caixin.com)