Ping An-backed fintech Lufax files for US IPO

October 8, 2020.

Lufax Holding, a Chinese online wealth management and lending platform, backed by China's largest insurer Ping An Insurance Group, is looking to go public in the U.S. , as Chinese companies continue to look to U.S. markets despite political tensions.

The Shanghai-headquartered company plans to list American depositary shares on the New York Stock Exchange under the ticker “LU,” it said in a regulatory filing Wednesday. Lufax did not disclose the price of its shares and how many it plans to offer during the listing but used a placeholder amount of $100 million for its “proposed maximum aggregate offering price.”

The company 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. As of June this year, its total balance of retail credit facilitated was RMB 519.4 billion ($73.5 billion), while its total client assets made through its online wealth management platform reached RMB 374.7 billion ($53 billion).

Considered the world’s fourth most valuable unicorn, with a valuation of $38 billion, according to the Hurun Research Institute, 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, the company said. 

Additionally, Lufax’s net profit for the first half of the year stood at RMB 7.27 billion ($1.07 billion), compared with RMB 7.48 billion ($1.1 billion) a year earlier. Net interest income during the same period rose 38% to RMB 2.99 billion ($440.3 million). 

Lufax’s listing follows the slew of Chinese companies 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 , New York Stock Exchange or NYSE American as of October 2020. 

This comes despite escalating tensions 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.

One notable 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 gearing up for a blockbuster dual listing in Shanghai and Hong Kong. 

In its filing, Lufax warned that various factors, like the global pandemic and the tension between the two countries, could adversely impact the company. 

“Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition,” it said. 

“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.”

(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.