Chinese Fintech Giant Lufax Aims to Raise $2.36 Billion in New York IPO

Fintech unicorn Lufax Holding Ltd. has become the latest Chinese company to tap U.S. capital markets despite rising tensions between the two countries, setting out a price range for a New York IPO that could raise as much as $2.36 billion.

Lufax, which is backed by financial conglomerate Ping An Insurance (Group) Co. of China Ltd., plans to issue 175 million American depositary shares (ADSs) that will be priced between $11.50 and $13.50 each, according to its updated prospectus filed with the U.S. Securities and Exchange Commission on Thursday. The company could raise $2.36 billion if the shares are priced at the top of the range. An overallotment option could bring the total offering to 201.25 million ADSs, which would bring in $2.72 billion if the option is exercised and the shares are priced at the top of the range, the prospectus showed. The company will trade under the ticker “LU.”

The imminent IPO marks the end of an almost three-year marathon for one of China’s largest online wealth management platforms, which has been planning an overseas listing since 2017. Set up by Ping An Group in 2011 as a peer-to-peer (P2P) lending platform, Lufax became one of the biggest players in the sector. But a string of industry scandals that left millions of investors nursing heavy losses triggered a crackdown by financial regulators. The tightening regulatory environment, and Lufax’s decision to wind down the P2P business and reinvent itself delayed its plan to go public in Hong Kong.

U.S. capital markets remain a popular destination for Chinese companies even amid worsening relations between Beijing and Washington, and a dispute between the two countries’ regulators over the inspection of audits of China-based companies listed in the U.S. The Trump administration is proposing legislation that would ban companies from being listed if Chinese regulators refuse to allow inspections of audits. 

Firms based in China and Hong Kong have raised $10.9 billion through U.S. IPOs so far this year, the most since 2014, according to data compiled by Bloomberg. Among them are electric-car maker Li Auto Inc., which launched a $1.1 billion IPO in July, and electric vehicle startup Xpeng Inc. which raised about $1.5 billion in August.

Even so, many Chinese companies are going the other way. Some have given up their U.S. listings and moved back to the mainland or Hong Kong, while others like e-commerce giant Alibaba Group Holding Ltd. have launched secondary listings in Hong Kong, and some are choosing to IPO in both Hong Kong and on the mainland. On Wednesday, Ant Group Co. Ltd., which operates the Alipay third-party payment platform, cleared the final hurdle for its highly anticipated concurrent IPO in Hong Kong and Shanghai.

After retreating from the P2P market, Lufax transformed itself into one of the biggest wealth management companies in China. The company, which operates online investment and lending platforms, said its wealth-management clients held 374.7 billion yuan ($56.1 billion) of assets as of June 30, the third-highest figure of any Chinese nontraditional financial services provider, according to its prospectus, which cited consulting firm Oliver Wyman. P2P products as a percentage of its total client assets have fallen to 12.8% from 29.8% at the end of last year and 50.6% at the end of 2018, according to its prospectus.

As of the end of June, retail investors had 519.4 billion yuan of loans outstanding that had been facilitated by its platforms, putting Lufax at No. 2 among its domestic peers. Lufax reported a net profit of 7.3 billion yuan for the six months ended June 30, down 2.8% on the same period the year before. Its revenue was up 9.5% at 25.7 billion yuan.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)

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