Chinese fintech Lufax files IPO in the US
Published: Oct 08, 2020 08:33 PM

Passengers walk through New York stock exchange in March. Photo: CNSphoto

As Chinese fintech company Lufax files to go public in the US, the country's rising hostility towards China and its relentless crackdown on Chinese tech companies has made many Chinese companies "think twice" about listing on US capital markets, experts said.

Lufax — one of China's biggest wealth management platforms backed by Chinese financial giant Ping An Group — filed to go public in the US despite heightened scrutiny on US-listed Chinese companies.

In its filing with the US Securities and Exchange Commission (SEC) on Thursday, the Shanghai-based company revealed it plans to list on the New York Stock Exchange under the ticker "LU", although it did not reveal how much funding it seeks from the IPO.

Lufax is valued at $39.4 billion following the latest financing round in December 2019, and posted a 7.3 billion yuan ($1.03 billion) net profit for the six months ending on June 30.

Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times that because of the US government's hostility and aggressive attitude towards China, a lot of Chinese companies have modified their original US IPO plans, choosing to list in Hong Kong instead. 

"As far as I know, as long as the companies have alternatives to choose, they would rather shy away from US capital markets," Zhang told the Global Times, predicting that the number of Chinese companies listing in the US would drop by at least 60 to 70 percent, compared with 2017 or 2018. 

However, there will be some exceptions.

Lufax's US listing follows an array of Chinese companies including EV manufacturers Xpeng Motors, Li Auto and delivery platform Dada Nexusboth (which went public in the US earlier this year).

From January to August, 19 Chinese companies were listed on US stock exchanges, raising a total of $6.9 billion, an increase of approximately 170 percent year-on-year, according to the Nikkei Asian Review.

According to Zhang, some technology companies that still have huge operational losses are likely to stick to US stock markets, as Hong Kong's investment logic is prone to profitable companies, while the A-share markets favor companies with heavy assets. 

Also, some business concepts, like fintech or new-energy cars, have higher acceptance rates in the US capital markets. On the Chinese mainland, however, many investors still hold a cautious attitude towards such companies, particularly after the government's ramped-up efforts to crack down on financial fraud, Zhang said.

He also stressed that Chinese companies whose investors consist of many global investors, particularly US investors, feel a higher sense of security in seeking US IPOs, as their investors could help negotiate with the US government, should the latter take action against them.

Lufax's IPO has attracted 38 international global investors including J.P. Morgan and UBS' London branch.

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