Online Brokerage Firm Futu Prices Nasdaq IPO at $131 Million
The fully digitized brokerage platform is backed by Chinese tech and gaming giant Tencent and Sequoia Capital.
Futu Holdings Ltd. disclosed today that it is seeking to sell up to 10.9 million American depositary shares for a price between $10 and $12 per share as it pursues its initial public offering in New York, according to an amended prospectus filed Tuesday.
The online brokerage firm, which launched in 2012, said it was now looking to raise up to $130.8 million on the Nasdaq Global Market under the ticker symbol "FHL."
The filing, which was the first to specify the number of shares and their pricing, amended the company's original filing that proposed an IPO of as much as $300 million.
Underwriters on the deal, Goldman Sachs (Asia) LLC, UBS Securities LLC, Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., and BOCI Asia Ltd., may acquire up to an additional 1.64 million ADSs for over-allotments, if any.
The fully digitized brokerage company aims to provide online stock trading services with low fees and live feeds. Unlike other platforms, Futu allows mainland Chinese investors to trade stocks in Hong Kong and the United States. It is reported that Futu Securities was among the top five brokerage companies in Hong Kong with more than 80 percent of users from mainland China.
In a recent filing, Futu reported its revenue for the year through December reached $103.6 million, an increase of 159 percent from the preceding year. Net income for the year was $17.7 million, or 1 cent per share, in contrast to a net loss of $1 million in 2017.
The platform has been backed by Chinese conglomerate Tencent Holdings Ltd. (HKEX: 0700), as well as Sequoia Capital and Matrix Partners China.
As well as a main investor of Futu, Tencent is also a key supporter of the company. Leaf Hua Li, founder and chief executive officer of Futu was Tencent's eighteenth employee. He joined Tencent in 2000 and was an early and key research and development participant in Tencent QQ and the founder of Tencent Video. Futu's chief technology officer, PPchen Weihua Chen, was also from Tencent. He was the former head of Tencent QQ's back-end services and led multiple system restructuring projects of Tencent QQ with hundreds of millions of simultaneous online users.
Futu stated that the purpose of its public offering is to provide its employees with equity incentives and obtain additional capital. It said that it plans to use the proceeds of the sale for "general corporate purposes, including research and development, working capital needs, and increased regulatory capital requirements of the HK SFC and regulatory authorities in other jurisdictions as a result of our business expansion."
The company originally planned to go public in Hong Kong, but later picked New York for a more streamlined listing process. It first filed with the U.S. Securities and Exchange Commission confidentially on Oct. 19.