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Auto Finance Lender Fuqin Fintech Seeks to Sell $51 Million of Shares in IPO

Another Chinese lending platform seeks to sell its shares on the Nasdaq under the ticker symbol “FQJR.”

Anna Vodopyanova
    Aug 31, 2018 8:25 PM  PT
Auto Finance Lender Fuqin Fintech Seeks to Sell $51 Million of Shares in IPO

Fuqin Fintech Ltd., another in a slew of Chinese lending platforms seeking a public offering in recent weeks, has applied for a U.S. listing as it aims to sell up to 8.5 million of its ordinary shares priced between $5 and $6 apiece.

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Fuqin began its lending operations in 2014 matching borrowers and lenders and expanded into the online auto finance marketplace two years later. According to its prospectus filed Friday, the company had 96 business outlets throughout China, covering 86 second- and lower-tier cities, which the company said, were traditionally underserved markets. Through its offices, Fuqin conducts promotion, assistance with lending applications, and installation of GPS devices on automobiles and is marketed to individuals, micro-, small-, and medium-sized enterprises, and sole proprietors. All loans Fuqin issues are secured by the borrowers' cars.

Although the majority of its business - 58 percent in 2017 - has been conducted offline, Fuqin said the trend has been shifting to online operations, and its online lending platform has been gaining popularity, fueled by the ability to reach more customers.

As of December, Fuqin had facilitated $331.9 million in loans since its inception. In 2017, loans issued increased 216 percent from the year before to $232.9 million. The annual percentage rate paid by borrowers has ranged between 6.96 and 18 percent, with the most prevalent rate at 11.88 percent. The average loan amount in 2017 was $14,600.

Last year, Fuqin's revenue reached $17.8 million compared with $5.1 million in 2016. Its income in 2017 was $597,000 in contrast to a $2.7 million loss in 2016. Earnings per share were 1 cent last year.

In its filing, Fuqin said it had developed its own risk assessment program, Automobile Risk Management System (ARMS). About the system, the company said in its filing: "It has reduced cost in human labor and improved risk management in automobile financing by monitoring the collateral automobiles and the risk of the loans on an all-round, full-time basis. ARMS provides 24/7 online real time monitoring, position tracking, route replay, data management, risk assessment of the car's track record, warnings of abnormal activities, warnings of the risks regarding secondary mortgage, warnings of signal disturbance, and other post-loan management solutions."

The company said it intends to use the proceeds of the stock sale for the expansion of its business by investing in ads and marketing, working capital, and general corporate purposes.

Fuqin was the second Chinese lending platform to file for an IPO in New York this week after X Financial, which on Tuesday said it was seeking a $250 million offering. Earlier this month, another auto-backed financing provider that focuses on small- and micro-enterprises, Weidai Ltd., applied for a $100 million offering. In July, Pintec Technology Holdings Ltd., a financing facilitator, filed to have its shares listed for $70 million and was expected to begin trading this month, but delayed its offering.

Some U.S.-listed Chinese financial platforms, like Qudian Inc. (NYSE: QD), have seen their shares slide recently after Beijing tightened policies in the private lending industry in an attempt to lower risks. Regulators have been making new checks on peer-to-peer platforms to shut down those that are performing poorly. Many P2P firms have found themselves unable to comply with the regulations and have been forced to shut down, leaving less competition for larger, more successful firms.

While the maximum amount of Fuqin's IPO was listed at $51 million, the company would receive only $21 million of that as 5 million of the total shares to be offered would be sold by existing, private investors in the company.

Upon the completion of Fuqin's initial public offering at the maximum amount, new shareholders collectively would own 6.54 percent of the voting power in the company. Huaishan Cao, Fuqin's founder and leading manager, would own 84.11 percent.

Boustead Securities LLC is acting as the underwriter on the deal.

Fuqin seeks to sell its shares on the Nasdaq Capital Market under the ticker symbol "FQJR."

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