Caixin
Oct 31, 2020 05:10 AM
FINANCE

China Fintech Firm Lufax Raises $2.4 Billion in U.S. IPO

The offering values Lufax at $33 billion based on the outstanding shares listed in its prospectus.
The offering values Lufax at $33 billion based on the outstanding shares listed in its prospectus.

(Bloomberg) — Chinese financial technology company Lufax Holding Ltd. raised $2.4 billion in a U.S. initial public offering (IPO) priced at the top of an indicative range just days after U.S. stocks suffered their biggest drop since June.

The company sold 175 million American depositary shares for $13.50 each, it said Friday in a statement. The amount raised makes Lufax’s offering one of the biggest IPOs by a Chinese company in the U.S. this year.

Lufax, backed by Ping An Insurance Group Co., China’s largest insurer by market value, marketed its American depositary shares (ADSs) for $11.50 to $13.50 each. Two ADSs represent one ordinary share.

The IPO coincides with a week of significant volatility. The S&P 500 Index suffered its worst rout in four months Wednesday amid worries about the economic hit of the pandemic. U.S. stocks bounced back Thursday, with investors encouraged by better-than-forecast economic data. The S&P 500 gained 1.2%, the most since Oct. 12.

Lufax is going public at the same time as fintech behemoth Ant Group Co., which is set to raise $34.5 billion in listings in Shanghai and Hong Kong, making it the world’s biggest IPO on record.

Lufax, which was once among China’s largest peer-to-peer (P2P) lenders, has morphed into a financial giant offering wealth management and retail lending services. At $13.50 a share, the offering values the company at $33 billion based on the outstanding shares listed in its prospectus.

Chinese authorities launched a sweeping crackdown on the unruly P2P sector three years ago, forcing the company to transform its business. Assets under management dropped by 6.1% in 2019 reflecting “asset portfolio adjustment and restrictions on consumer finance products,” Ping An said in February. Wealth management transaction volumes fell by almost 30%.

The company plans to use the funds from the IPO for purposes that may include investment in product development, sales and marketing activities, technology infrastructure, acquisitions or investments, according to the prospectus.

Goldman Sachs Group Inc., Bank of America Corp., UBS Group AG, HSBC Holdings Plc and China PA Securities Co. are leading Lufax’s offering. The shares were expected to begin trading Friday on the New York Stock Exchange under the symbol LU.

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