Chinese online lending and wealth management firm Lufax Holding, which is backed by China's largest insurer Ping An Insurance Group, is seeking to raise up to $2.36 billion from an initial public offering in America, according to its filing with the U.S. Securities and Exchange Commission.
Lufax said Thursday that it will issue 175 million American depositary shares, which will be priced between $11.50 and $13.50 per share. At the top end of the range, Lufax’s offering would be valued at $2.36 billion and at the lower end, it would be valued at $2.01 billion. Citibank will be acting as the depositary for the ADS, Lufax said.
Earlier this month, the Shanghai-headquartered firm revealed plans to list on the New York Stock Exchange under the ticker “LU.” It is currently considered the world’s fourth-most valuable unicorn, with a valuation of $38 billion, according to the Hurun Research Institute. Its IPO follows the listing of OneConnect Financial Technology, another fintech company backed by Ping An, which raised $312 million in December.
The company's prospectus revealed that funds will be mainly used to ramp up investment in product development, sales and marketing activities and beef up its technology infrastructure, capital expenditures. It also plans to look for global expansion and acquisition opportunities, it said.
Lufax primarily operates as a personal lending platform for small business owners and salaried workers in China and also provides wealth management services to China’s middle class and wealthy population. Lufax first started as a peer-to-peer lender but reorganized itself after China cracked down on the industry in 2017. Last year, the company said it stopped offering P2P lending products. As of June this year, P2P products as a percentage of total client assets decreased to 12.8%, and no new loans this year were funded by peer-to-peer individual investors, Lufax said.
Its IPO plans follow the string of Chinese companies that have been looking to go public in the U.S. and take advantage of the stock market rebounds this year. KE Holdings (Beike Zhaofang), Li Auto and Xpeng are some of the Chinese companies that have an IPO listing year of 2020. It joins the total of 217 Chinese companies listed on either the Nasdaq, New York Stock Exchange or NYSE American as of October.
An exception to the trend of Chinese companies seeking to list in the U.S. is Ant Group, controlled by Alibaba co-founder Jack Ma, which is planning a blockbuster dual listing in Shanghai and Hong Kong. Recently, it received approval from the China Securities Regulatory Commission for the Shanghai portion of its IPO, which followed separate approvals for its Hong Kong portion. It is seeking to raise $35 billion from its IPO.
Lufax’s filing comes amid a worsening relationship between the U.S. and China. American lawmakers have been pushing for greater scrutiny of Chinese companies through proposed legislation, threatening to delist some firms in the U.S. The company said in its filing that the global pandemic and the tension between the two countries could be considered risk factors to the company.
“There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs,” it said. “Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China.”
Goldman Sachs (Asia), BofA Securities, UBS Securities, HSBC Securities, Morgan Stanley, Jefferies, CLSA and China PA Securities (Hong Kong) were the lead underwriters to the company’s initial public offering.