Lufax, one of the largest peer-to-peer lenders and online wealth managers in China, has reportedly pushed back its awaited initial public offering, possibly until next year.
The delay in the listing of the Ping An Insurance Group-controlled firm could result in a muted environment in Asia’s equity capital markets for 2017, after Ant Financial Services, a subsidiary of e-commerce giant Alibaba, also held off on going public, possibly until the last quarter of 2018.
In early 2016, Lufax was valued at US$18.5 billion after its latest round of fundraising, reports the Financial Times. Meanwhile, Ant was valued at US$60 billion, and had the IPO pushed through, it would’ve netted Ant up to US$5 billion.
The IPOs of Lufax and Ant, as well as that of Zhong An Online Property and Casualty Insurance, were some of the most eagerly awaited listings in the Asian financial markets for 2017, following a slow year in 2016. The volume of global IPOs fell by 32% in 2016 to US$133 billion, the lowest in four years, according to data from Dealogic. The largest listing last year was for that of Postal Savings Bank of China at US$7.5 billion.
According to several industry experts, the lack of clear directions from financial regulators governing the Chinese online wealth management industry has made Lufax wary about going public.
“For Lufax, the regulation is like a time-bomb,” one banker familiar with the company was quoted as saying by FT. “Nobody knows what it’s going to do.”
Massive and sweeping regulatory changes have rocked China’s online finance sector, causing uncertainty. Lufax was most likely thinking about the impact of new regulations when it decided to delay the IPO, an expert said.
More than half of the country’s peer-to-peer lenders, which are online platforms that link lenders and borrowers outside of the traditional banking system, could be put out of business once new regulations come into effect. Several scams have happened, angering both investors and regulators.
In one such incident, Cosun Group defaulted on high-yield bonds worth US$45 million which were sold on one of Ant Financial’s platforms. It was later revealed that several documents used in the transaction were falsified.
Ping An to harness new US$1 billion fund for financial and health tech investments
10 largest insurance companies in the world revealed
Internet finance boosts Ping An’s growth