Ping An-backed Lufax seeks fresh capital

Chinese peer-to-peer lender Lufax is once again tapping investors ahead of a planned IPO next year.

Chinese peer-to-peer lender Lufax is back in the market seeking funds ahead of its planned IPO next year, according to people familiar with the situation.

Shanghai-based Lufax hopes that its second round of fund raising will value the entire company at a higher price than its Series A round of Rmb$3 billion ($485 million) from a group of institutional investors in March.

That private placement valued the four-year-old financial technology company at about $10 billion.

“The pre-IPO stake sale is a stepping stone that would set a valuation benchmark for the planned IPO,” said a person familiar with the situation.

There are 16 fintech startups globally that are valued at more than $1 billion, or so-called unicorns, according to venture capital database CB Insights. At a valuation of about $10 billion, Lufax ranks high in the list, surpassing Square, a US payments startups known for its credit card-reading services.

The fund raising talks with investors are at an early stage and the private placement of capital may still not happen, said one of the people. "The fund raising is one of several options," the person said.

Lufax plans to go public in the second half of next year according to a market source.

Zheng He Capital Management Limited, CDH Investments, China International Capital Corp and Morgan Stanley were the investors in the Series A round, leaving its early backer Ping An with a minority stake, according to the people familiar with the deal. According to Ping An’s annual results, Ping An owned a 49.99% voting rights in Lufax. 

Morgan Stanley and Goldman Sachs are arranging the latest round of funding, according to the people familiar with the matter. Morgan Stanley worked on the Series A round.

Lufax and its bankers declined to comment on fundraising plans. 

Plentiful capital

In a separate interview in early November, Gregory Gibb, chairman of Lufax, told FinanceAsia that capital was plentiful for the firm. 

“Private funding is extremely efficient and still widely available for us, which also meets our near term funding objects,” said Gibb, a former McKinsey partner. “An IPO at the right time can help increase our strategic flexibility as it creates a new currency for either acquisition or mergers down the road.”

Established in 2011, Lufax, the short term for Shanghai Lujiazui International Financial Asset Exchange, was set up with the support of the Shanghai municipal government and is a subsidiary of Ping An Insurance Company of China, the country’s second largest insurer by premiums.

It is unclear what the capital will be used for this time round. Lufax has been growing fast and is consuming capital as it builds out its platform. In July it said that its flagship P2P marketplaces have reached 10 million registered users.

Total transaction volume on Lufax platforms rose more than 10 times year on year to Rmb512.2 billion ($80.4 billion) in the first six months to June, according to its interim report.

The Series A round was partly used to diversify its product range. Lufax has two online lending platforms. A lending service catered to individuals and small and medium sized business; and a specialized financing service catering to institutional investors.
Lufax also acquired Puhui Finance this year from the Ping An Group to create the Lufax Inclusive Financial Department and to transform the Company to an information service platform for standard and non-standard financial assets and P2P transactions.

This article has been updated to correct the list of investors in the Series A round of financing


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