Hong Kong, US among preferred IPO venues of China’s fintech firms

Tightening financial regulations in the mainland force companies to look for capital sources abroad

Hong Kong, US among preferred IPO venues of China’s fintech firms

Insurance News

By Gabriel Olano

As mainland China tightens its financial regulations, a number of financial technology firms have rushed overseas to raise funds via initial public offerings (IPOs), most often on stock exchanges in Hong Kong or the US.

One such firm is Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, which has sought to raise up to US$1.5 billion through an IPO in Hong Kong. The insurer claims to have a customer base of 500 million after five years in business.

“An increasing number of fintech IPOs in Hong Kong and the United States are expected to take place,” Gao Jianbin, a PwC partner, told the South China Morning Post. “They mainly aim to list in the US, though Hong Kong is also an option.”

Other fintech firms, such as online financial marketplace Lufax and Alibaba-affiliated Ant Financial, are also planning IPOs outside of the mainland, but no dates have been revealed yet.

Chinese authorities have issued stricter guidelines for the peer-to-peer (P2P) sector last year, requiring these platforms to appoint custodian banks to supervise client deposits and fully disclose information about their operations.

According to analysts, P2P lenders are among the firms which are in dire need of fresh capital to expand, leading them to look overseas. However, the stricter regulations could force many of them out of business.

The sector used to be the emerging darling of the Chinese financial system, but fraud issues leading to over RMB100 billion (US$15.3 billion) in losses and the collapse of several lending platforms led to doubts being cast over its reliability.

Related stories:
Foreign-owned insurers in Malaysia rushing to find domestic partners
Hong Kong declines Morgan Stanley-backed broker’s IPO bid
Online-only insurer ZhongAn Online Property and Casualty Insurance planning $1.5 billion listing

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