Lufax Holding Ltd., Chinese wealth management giant backed by Ping An Group, has publicly filed for an initial public offering in the United States.
Based in Shanghai, Lufax provides financing and wealth management services for China’s middle-class and affluent population, as well as small businesses.
Through June 2020, the company had managed a total of $53 billion in client assets and facilitated $73.5 billion in loans, according to a Wednesday filing with the U.S. Securities and Exchange Commission. Over its 15 years in lending and nine years in wealth management, Lufax said it has connected 13.4 million borrowers with 50 banks, trusts, and insurers.
Earlier, Lufax was also known for its peer-to-peer lending services, but it has abandoned the sector after Beijing’s utter crackdown on the industry, which had pushed thousands of smaller firms out of business.
Now, Lufax highlights the following strengths in its business model: focus on the underserved segments, capital-light operations, accumulated data, purpose-built technology including AI and blockchain solutions, cooperation with Chinese giant Ping An, and others.
For 2019, Lufax booked $6.8 billion in revenue, an 18% year-over-year increase. Net profit, it said, was $1.9 billion, nearly level with 2018. In the six months through June 2020, Lufax generated $3.6 billion in revenue on $1 billion in net profit, according to the prospectus.
In its prospectus, Lufax set $100 million as a placeholder for the IPO target. Renaissance Capital estimated that the giant could raise up to $3 billion. At that level, Lufax would surpass not only the Chinese U.S. IPOs of 2020, but several past years.
Lufax’s anticipated IPO approaches at a time of heightened Sino-American tensions and continued market uncertainty over the impact of the Covid-19 pandemic. Washington’s trade and tech war with Beijing has spilled over to the financial markets and many a Chinese firm turned to domestic stock exchanges including the trendy STAR Market in Shanghai and Shenzhen’s revamped ChiNext board. Both mainland China and Hong Kong have been reforming their markets, opening up to lure its tech giants back home.
However, Lufax has turned to the West for a listing, unlike its parent, Ping An Group (HKEX: 2318; SSE: 601318; OTC: PNGAY), which is traded in Hong Kong and Shanghai. Notably, Lufax follows to Wall Street another of Ping An’s affiliates, OneConnect Financial Technology Co. Ltd. (NYSE: OCFT), which debuted in December 2019 in a $312 million offering. Recently, OneConnect completed a follow-on offering worth $324 million; its stock now trades at double its debut price of $10 per share.
Reportedly, Lufax has confidentially filed for a listing in early August. The South China Morning Post reported at the time that the company attracted Goldman Sachs, HSBC, and UBS and Bank of America to secure its public float. In addition, according to its SEC filing, Lufax has also hired China PA Securities (Hong Kong), Morgan Stanley & Co., CLSA Ltd., and Jefferies LLC.
Lufax said it intends to use the new capital “for general corporate purposes, which may include investment in product development, sales and marketing activities, technology infrastructure, capital expenditures, global expansions and other general and administrative matters.” Another portion could fund potential acquisitions and investments.
Lufax seeks to become publicly traded on the New York Stock Exchange under the symbol “LU.”