Caixin
BUSINESS & TECH

China High-Tech Finance Firms Bankroll Listing Renaissance in New York

By Yang Ge

(Beijing) — Peer-to-peer (P2P) lender Hexindai and online advertising agent iClick Interactive have joined a growing list of Chinese companies aiming to list in New York this year, led by a surge in young high-tech financial companies called “fintech.”

Both companies have already begun preparations for their initial public offerings (IPOs), said two sources, who spoke to Caixin on condition of anonymity because no public filings have been made yet. The flurry of new listings could raise more than $2 billion combined through a series of IPOs in both New York and Hong Kong.

The offerings would jump-start a stalled market for Chinese IPOs in New York, which was once a favorite listing ground for such venture-backed high-tech firms. Only a handful of companies have listed in New York over the past two years, and many more delisted on the belief that they could get better valuations by making IPOs back in China.

The new flurry of listing candidates is dominated by fintech names, nearly all of which have histories dating back 10 years or less. The financial services market was previously mostly closed to private companies, but has been slowly opened in Beijing’s effort to make the sector more dynamic and better able to serve the nation’s growing private sector.

Hexindai and iClick join P2P lender China Rapid Finance, which made its first public filing at the end of March for a New York IPO to raise up to $100 million. The largest of the New York offerings could come from online consumer microlender Qudian, which sources previously told Caixin was aiming to raise up to $1 billion in a New York listing as early as June. 

A third P2P lender, Ppdai, is also aiming to make a New York IPO by year-end, according to two sources with direct knowledge of the situation. Previous reports had said the company wanted to raise up to $200 million through such an offering. The largest offering from the group is likely to come from Lufax, one of China’s biggest P2P lenders, which could raise more than $1 billion in its offer that could come in Hong Kong or possibly China later this year.

The companies are mostly eschewing Hong Kong due to that city’s tougher listing requirements, and are skipping their home China market due to its long waiting times created by a drawn-out approval process, said Ryan Roberts, an analyst at MCM Partners.

“The U.S. market is highly attractive for fintech names for a few reasons,” he said. “There are already a few China fintech stocks there, … and I think there is more appetite from investors for those companies with these newer business models.” He added that U.S. investors are already familiar with the fintech category through the presence of such homegrown names as LendingClub Corp. and OnDeck Capital Inc.

The new IPO bumper crop would be the largest since 2014, when about a dozen Chinese companies listed in New York, including e-commerce leaders Alibaba Group Holding Ltd. and JD.com Inc., as well as social networking giant Weibo Corp., often called the Twitter of China.

But the last two years saw new offerings slow sharply, and instead, many companies privatized with an aim to relisting in China. One of the few companies to list during that period was Yirendai Ltd., a P2P lender whose shares debuted in late 2015. Since then, its stock has more than doubled, from an IPO price of $10 to its latest close of $24.90.

Contact reporter Yang Ge (geyang@caixin.com)

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