Lufax, one of China’s biggest wealth management platforms, filed for an initial public offering in the US on Thursday.
The Shanghai-headquartered firm, which is backed by financial giant Ping An Insurance Group, China’s largest insurer, plans to list on the New York Stock Exchange under the ticker “LU,” according to a filing with the Securities and Exchange Commission.
It joins Ant Group, an affiliate of Chinese e-commerce giant Alibaba Group, which is seeking $35 billion from a dual listing in Hong Kong and Shanghai and online retailer JD.com fintech affiliate Jingdong Digits Technology Holding, which aims to bring in $2.9 billion from joining Shanghai’s STAR Market.
The prospectus did not disclose the actual amount of capital to be raised. But according to previous market estimates, Lufax’s IPO will raise $2 billion to $3 billion. Based on this calculation, it is expected to become the largest IPO of China capital stock listed on the US stock market this year, and may be the largest financial technology IPO in the United States so far.
Lufax’s New York listing comes as rising tensions between the US and China. Lawmakers in Washington are pushing for greater scrutiny of Chinese companies that threatens to delist some firms in the US.
In its SEC filing, Lufax warned that “a severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.”
“There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs. 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,” the filing said.
Public information shows that Lufax is a personal financial service platform incubated by the licensed organization Ping An Group. Its main business includes technology-driven retail credit and wealth management services. In the first round of financing in early 2019, the valuation reached $39.4 billion.
The documents filed with the SEC did not disclose the amount of funds it plans to raise on the New York Stock Exchange, nor did it provide a timetable for listing progress.
According to the prospectus, in 2017, 2018, 2019 and the first half of 2020, Lufax achieved operating revenue of 27.8 billion yuan, 40.5 billion yuan, 47.8 billion yuan and 25.7 billion yuan, respectively, with net profits of 6 billion yuan, 13.6 billion yuan, 13.3 billion yuan and 7.3 billion yuan, respectively. Lufax’s net profit margin also increased year on year, from 21.7% in 2017 to 28.3% in the first half of 2020, and the annual compound growth rate of net profit from 2017 to 2019 was close to 50%.
As of June 30 this year, the balance of loans managed by Lufax reached 519.4 billion yuan, and the assets of users under management reached 374.7 billion yuan.
“Lufax’s financing will be used to further improve the overall operational efficiency, including continuing to strengthen the construction of technical infrastructure, technology research and development, technology investment or acquisition, product development, sales and marketing activities,” the prospectus showed.
According to Dealogic, 26 Chinese companies have filed for an IPO on Wall Street so far this year, selling $9 billion worth of shares, compared with a total of $3.5 billion in 25 transactions through 2019.
Goldman Sachs, Bank of America Securities, UBS Investment Bank, HSBC and China PA Securities are the lead underwriters for the IPO.