Ping An-backed Wealth Management Company Lufax Files For U.S. IPO

The Chinese wealth management company Lufax Holding Ltd. has filed for an initial public offering (IPO) in the U.S. As of now, it has not priced its shares and not have stated how many shares it will list on the stock exchange. According to people familiar with the matter, it’s targeting to raise USD 3 Billion.

Amidst the tension between the U.S. and China, Chinese technology companies are taking advantage of the rebound on Wall Street. The Shanghai-based company plans to list its company on the New York Stock Exchange under the ticker “LU,” as mentioned in the filing with the Securities and Exchange Commission (SEC).

Earlier this year, Chinese electric carmaker companies Xpeng Motors and Li Auto went public in the country. China-based e-learning company iHuman files for a U.S. filing in September 2020. Moreover, its real estate company KE Holdings Inc. that is expected to raise USD 2 Billion in funding.  Currently, there are 217 Chinese companies listed on the US Stock Exchange with a cumulative market capitalization of USD 2 Trillion.

Lufax’s U.S. IPO application comes amidst the rising tension between the U.S and China when the former nation proposed legislation that can force the Chinese companies to give up their listing in the country. The White House lawmakers are pushing for greater scrutiny of Chinese companies. “We believe it is only a matter of time before this bill (or something similar) is signed into law,” Raymond James Analyst Ed Mills wrote.

The company was valued at around USD 38 Billion before its latest fundraising in 2018, Reuters reported. It has posted a net profit of USD 1.07 Billion for the six months which ended in June 2020, while its net interest grew by 38% to USD 440 Million. The listing is expected to be easy for Lufax as it is registered in the Cayman Islands. Last year, Lufax had to postpone its HongKong listing plans after it failed to secure a lending license from the Chinese government.

“There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations, and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China,” Lufax said in its SEC filing. USB Investment Bank, HSBC, Bank of America, Goldman Sachs (Asia) L.L.C., and China PA Securities are the lead underwriters of IPO.

This company isn’t the first financial company planning to go public outside China. Alibaba’s financial subsidiary group Ant Group is also planning a concurrent listing on the Hong Kong stock exchange and the Shanghai stock exchange. However, there are not reports on Alibaba’s plans to go public in the U.S.

Last year, OneConnect Financial Technology Co., filed an IPO worth USD 100 Million and raised around USD 312 Million on New York Stock Exchange. Like Lufax, OneConnect is also backed by Ping An Insurance Group, China’s largest insurance company. The rising tensions between the two nations have persuaded the Chinese companies to look for listings outside the U.S.