Ping An-backed Lufax defies geopolitical rigidity with $2.4bn US IPO

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Lufax, one in all China’s largest on-line lenders, raised $2.36bn in one of many largest US inventory market listings this yr, an indication of the enduring attract of a New York itemizing for Chinese language companies regardless of the charged political state of affairs between the 2 international locations.

The Shanghai-based firm’s shares slid as a lot as 14 per cent of their first minutes of buying and selling on the New York Inventory Trade on Friday, because the broader inventory market declined, though they’d recovered to commerce flat by early-afternoon.

Lufax bought 175m American depository shares at $13.50, on the top quality marketed to traders, valuing it at $32.9bn.

Lufax was based in 2011 and is backed by the Ping An Insurance coverage Group, one in all China’s largest personal corporations. It focuses on shopper and small enterprise lending and its wealth administration arm targets China’s rising center class by linking fund managers with greater than 12m native traders.

The corporate had internet revenue of $1bn within the first six months of the yr.

“We nonetheless felt the US was the best place to begin for us by way of getting the best investor publicity, getting one of the best analyst protection, and the broader branding that comes with it,” Gregory Dean Gibb, Lufax chief govt, mentioned in an interview with the Monetary Occasions.

Heightened tensions between Washington and Beijing have spilled over into capital markets this yr with officers from the Trump administration discouraging US funding in some Chinese language corporations and calling for reforms focused at Chinese language corporations itemizing in New York.

US securities regulators and policymakers have zeroed in on how Chinese language-based teams are audited after the accounting scandal at Luckin Espresso. In Could, the Senate handed a invoice that may require Chinese language corporations to adjust to US accounting guidelines.

China doesn’t permit auditors within the nation to share their work with overseas regulators.

Some massive Chinese language corporations have spurned the US in favour of a home IPO. Ant Group, the Alibaba-linked funds firm, selected a joint itemizing in Hong Kong and Shanghai, the place it’s going to increase greater than $30bn within the largest IPO on report subsequent week.

Lufax is the fifth-largest IPO within the US this yr, in keeping with knowledge supplier Dealogic. Excluding the clean cheque firm choices which have dominated the US listings enterprise this yr, the Lufax IPO may rank because the second-largest within the US if underwriters promote extra shares within the coming days, trailing solely cloud database supplier Snowflake.

If bankers do promote these shares, as they historically do, it might even be the biggest US capital elevating by a Chinese language-based firm since Alibaba’s $25bn in 2014, Refinitiv knowledge confirmed.

Line chart of Share price ($) showing Lufax shares drop at the open before rebounding

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