China fintech firm Lufax raises $2.4 billion in U.S. IPO

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The Chinese financial technology firm Lufax Holding Ltd. raised $2.4 billion in a U.S. initial public offering priced at the top of an indicative range, just days after U.S. stocks suffered their biggest drop since June.

The company sold 175 million American depositary shares for $13.50 each, it said in a statement Friday. The amount raised makes Lufax’s offering one of the biggest IPOs by a Chinese company in the U.S. this year.

Lufax, which is backed by China’s largest insurer by market value, Ping An Insurance Group Co., marketed its American depositary shares for $11.50 to $13.50 each. Two ADS represent one ordinary share.

The IPO coincides with a week of significant volatility. The S&P 500 Index suffered its worst rout in four months on Wednesday amid worries about the economic hit of the pandemic. On Thursday U.S. stocks bounced back, with investors encouraged by better-than-forecast economic data. The S&P 500 gained 1.2%, the most since Oct. 12.

Lufax, which was once among China’s largest peer-to-peer lenders, has morphed into a financial giant offering wealth management and retail lending services. At $13.50 a share, it values the company at $33 billion based on the outstanding shares listed in its prospectus.

Chinese authorities launched a sweeping crackdown on the unruly P2P sector three years ago, forcing the company to transform its business. Its assets under management dropped by 6.1% in 2019 due to “asset portfolio adjustment and restrictions on consumer finance products,” Ping An said in February. Wealth management transaction volumes fell by almost 30%.

Lufax is going public at the same time as the fintech behemoth Ant Group, which is set to raise $34.5 billion in listings in Shanghai and Hong Kong, making it the world’s biggest IPO on record.
The company plans to use the funds from the IPO for purposes that may include investment in product development, sales and marketing activities, technology infrastructure, acquisitions or investments, according to the prospectus.

Goldman Sachs Group, Bank of America, UBS Group, HSBC Holdings and China PA Securities are leading Lufax’s offering. Its shares are expected to begin trading Friday on the New York Stock Exchange under the symbol LU.

Bloomberg News
Fintech IPOs Peer-to-peer lending Wealth management
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