Lufax has raised a further $1.22 billion from investors, valuing the Ping An-backed group at $18.5 billion ahead of an initial public offering expected in the second half of the year.
The Chinese peer-to-peer lender, founded in September 2011, said on Monday that it raised $924 million from new investors plus an additional $292 million from investors who took part in the previous round of venture capital funding.
The news followed an announcement at the weekend by JD.com, China’s second-largest e-commerce company, that its unit JD Finance raised $1 billion from a series-A funding round.
Lufax, which is short for Shanghai Lujiazui International Financial Asset Exchange, said Bank of China Group Investment, Guotai Junan Securities Hong Kong, and a unit of China Minsheng Banking Corp, were among the investors it raised fresh funds from.
The latest funding round values the firm significantly higher than the $10 billion figure it commanded in March, when it sold Rmb3 billion ($458 million) worth of stocks in a private placement. Investors then included Zheng He Capital Management, private-equity firm CDH Investments, Morgan Stanley, and mainland investment bank China International Capital Corp.
The new proceeds will be used to support Lufax’s existing peer-to-peer lending business and to diversify into new areas such as wealth management, Gregory Gibb, chairman and chief executive of Lufax, said in an audio clip recorded at a press conference in Shanghai.
“For 2016 we see more funding need in China’s tier-2 and tier-3 cities, while residents in tier-1 cities will continue to seek investment opportunities,” Gibb said. “Lufax will focus on building online-to-offline business as well as cross-border investments.”
Gibb said Lufax was open to the possibility of a dual listing in domestic and international markets but that the IPO destination had not yet been finalised.
Ping An Group, the country's second-largest insurer by premiums, now owns about 43% of Lufax following the second stake sale, down from 47.49% previously, according to Gibb, a former partner at consulting firm McKinsey.
Lufax was quoted in mainland Chinese reports saying that its full-year 2016 revenue is expected to jump to $3.1 billion, up from $706 million in 2015, while its annual loss will narrow to $68 million this year from last year’s $415 million.
The company reportedly said that it expects to make an annual profit of $1.55 billion in 2017.
At the end of 2015, Lufax had more than 360 million active users and handled more than Rmb 1.6 trillion worth of transactions on its various platforms.
Separately, JD.com said Saturday that its financial affiliate had raised $1 billion from its series A round, valuing the company at more than $7 billion.
Sequoia Capital China, China Harvest Investments, and China Taiping Insurance led the financing round, JD.com said in a statement.
“JD Finance has become a leading industry player by leveraging JD.com’s e-commerce expertise and advantages in big data and technology to provide financial solutions to Chinese consumers, innovative start-ups and traditional enterprises,” Richard Liu, founder and chief executive of JD.com, said in the statement. "By partnering with top financial and start-up service institutions, we will be even better positioned to create China’s leading financial technology ecosystem.”
A Beijing-based spokesman for JD.com said the company intends to retain a majority stake in JD Finance in the event it is listed.
JD Finance operates in three major business areas, namely supply chain finance, consumer finance, and crowdfunding. It also has an asset management, payment, insurance and securities unit. According to a statement, JD finance has a reward-based crowdfunding platform, which was launched in July 2014 and helped startups raise more than Rmb280 million.
China Renaissance, also known as Huaxing in Mandarin Chinese, is a financial advisor to JD Finance, a person familiar with the situation, said. The Beijing-headquartered boutique firm, founded by banking veteran Bao Fan, was also one of the bookrunners behind JD.com’s 2014 listing.