Online Lender LexinFintech Jumps on U.S. Debut

Shares of LexinFintech Holdings Ltd., the latest Chinese online lender to tap the U.S. capital market, jumped on their debut Thursday following a downsized, $108-million initial public offering (IPO).

The Shenzhen-based company, backed by e-commerce giant JD.com Inc., closed 18.9% higher at $10.7 on the startup board Nasdaq, after rising as much as 65.3% earlier in the session.

Ahead of the debut, LexinFintech sold 12 million American Depositary Shares (ADSs) at $9 each, at the low end of its indicative price range, the company said in a statement Thursday. Sources told Caixin earlier that the company originally had aimed to raise up to $500 million from the U.S. IPO.

LexinFintech is the latest firm to join the months-long IPO frenzy of Chinese microlenders and online consumer-loan providers in the U.S. However, China’s tightening regulatory environment for unsecured, short-term and consumer loans in the fourth quarter has cooled investor appetite. Shares of Qudian Inc., the Chinese microlender which raised $900 million in one of the largest IPOs in New York this year, now trade at almost half its IPO price.

Stringent new rules, announced by the People’s Bank of China and China Banking Regulatory Commission early December, cover not only microlenders but also peer-to-peer platforms that extend small loans. New measures include a statutory limit of 36% on the so-called annual percentage rate (APR) — the total interest rate and fees they charge, as well as a ban on unlicensed platforms.

No more licenses will be issued to new microlenders, and unlicensed operators will be banned from issuing so-called cash-loans — credit services that usually require no collateral but charge high interest rates.

“I hope that we can soon forget about the little progress we’ve made after the opening bell, and treat the IPO with a calm mind,” Xiao Wenjie, chief executive officer of LexinFintech said in an internal statement on Thursday.

In wake of recent curbs on unsecured short-term loans, Xiao said LexinFintech will “fully embrace the regulation, and strive to be the pioneer among compliant players.”

Founded in 2013, LexinFintech said it had more than 6.5 million customers with an approved credit line by the end of September, and more than 20 million registered users. Its main operation includes the online shopping mall Fenqile — which means “Happy Installment” in Chinese — that lets users purchase products such as mobile phones in installments.

During the first three quarters of 2017, loans issued by LexinFintech on average had an APR of 25.3%, and an average duration of nine months, according to its listing prospectus. The APR consists of the nominal interest rate on the loan and any other costs or fees involved, and the government’s new rule said any products should not charge an APR more than 36%.

As of end-September, the company had lent out 1.8 billion yuan ($273 million) of loans based on installment purchases, as well as another 14.1 billion yuan worth of unsecured personal loans.

Goldman Sachs (Asia) L.L.C., BofA Merrill Lynch, Deutsche Bank Securities and China Renaissance are acting as lead bookrunners for the offering, the company said.

Contact reporter Leng Cheng (chengleng@caixin.com)