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China P2P lender Lufax plans IPO worth up to $5 billion

Gregory Gibb, Lufax’s chairman and chief executive, sees an opportunity to expand beyond peer-to-peer lending in China. Photo: Bloomberg

Chinese peer-to-peer lender Lufax, which was valued at nearly $10 billion by investors earlier this year, is gearing up for an initial public offering that will give investors an opportunity to buy into one of the world’s fastest-growing financial firms, according to people familiar with the matter.

​Shanghai-based Lufax, short for Shanghai Lujiazui International Financial Asset Exchange Co., has tapped Morgan Stanley and Goldman Sachs Group Inc. to lead the preparations for the initial public offering, which could take place in the second or third quarter of next year, raising up to $5 billion, the people said.

Lufax connects individual investors with borrowers for loans of around $10,000, similar to how LendingClub Corp. and Prosper Marketplace Inc. operate in the U.S.

Lufax’s biggest backer is Chinese insurer Ping An Insurance (Group) Co. of China Ltd., which has a 47.5% stake. Founded in 2011, Lufax has more than 10 million registered users and its total transaction volume grew eightfold last year to reach $43.3 billion. Lufax expanded into offline lending in August when it paid $2 billion for consumer-lending company Puhui Ltd. from Ping An Insurance. That acquisition added more than two million offline borrowers to Lufax’s platform, and has served as a sourcing channel for it loans.

Lufax raised $488 million in March from a clutch of investors, to reach its current valuation of nearly $10 billion. The peer-to-peer lender has been discussing another round of fundraising that would value the company even higher, according to people familiar with the situation.

The IPO is expected to be one of the bigger deals in Hong Kong next year as Lufax looks to capitalize on investor interest in China’s fast-growing online lending market. Other big deals slated for next year include a Chinese state bank and a securities firm.

The country’s seventh-largest lender, Postal Savings Bank of China, is planning a $10 billion offering late next year, which could be the biggest IPO in Hong Kong for any financial institution in the past five years, people with knowledge of the matter said earlier this month. China Merchants Securities Co., the country’s sixth-largest brokerage by asset, is also expected to raise as much as $5 billion in a Hong Kong IPO next year, people familiar with the situation said earlier.

With the rapid growth of the peer-to-peer—or P2P—marketplace in China, some of the country’s other online lenders are also seeking to tap global investors.

P2P lending firm Yirendai this month filed with the U.S. Securities and Exchange Commission to raise $100 million in an IPO on the New York Stock Exchange, the first Chinese company of its kind to seek a U.S. listing. Another rival Chinese P2P lender, Dianrong.com, is planning to raise as much as $500 million in its next funding round, likely in March, company founder Soul Htite said in an interview this month.

Monthly online lending volume in China reached 120 billion yuan ($19 billion) in October, four times its level for the same period a year earlier, according to a report jointly published by online lender Wangdaizhijia and consulting firm Yingcan.

Lufax sees an opportunity to expand beyond peer-to-peer lending in China. It plans to use the capital it raised to expand its business in an attempt to become a dominant platform for institutional investors to buy and sell financial assets such as asset-backed securities, Lufax Chairman and Chief Executive Gregory Gibb said in an April interview with The Wall Street Journal.

Mr. Gibb, a former McKinsey & Co. partner in Taiwan and former chief operating officer of Taishin Financial Holding Co., said in that interview that the company aims to be an “open marketplace for financial products.” China’s consumers, especially those that can invest funds for more than six months, present an especially attractive opportunity to the company, he said.


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