Fintech Giant Lufax Plans IPO in Hong Kong to Hedging US Risk
(Bloomberg) — Fintech firm Lufax Holding Ltd. plans to go public in Hong Kong, the latest in a wave of New York-traded Chinese companies seeking alternative listings to hedge against the risk of being barred from US markets.
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The Ping An Insurance Group Co.-backed company aims to file for a listing in Hong Kong as soon as the second half of this year, according to people familiar with the matter, who asked not to be named because the information is private. The discussions are preliminary and subject to change, the people added.
Lufax’s preparations follow the delistings of a number of state-owned companies last week, as well as earlier moves by other Chinese tech giants to add secondary or primary listings in Hong Kong. Companies holding data deemed sensitive by Beijing could be forced off US exchanges as the two countries struggle to reach an agreement that would allow US regulators to inspect audits of Chinese businesses.
Lufax said in a statement that it has been exploring a potential listing on the Hong Kong stock exchange without setting a timetable, and declined to comment further. Lufax’s shares rose as much as 3.5% in pre-market US trading, while other Chinese stocks including Alibaba Group Holding Ltd. fell.
The US and China have been at odds for two decades over this issue. Mainland China and Hong Kong are the only two jurisdictions worldwide that do not allow inspections by the Public Company Accounting Oversight Board, with officials there citing national security and confidentiality concerns. The clock is ticking on a congressionally mandated deadline of 2024 to crack down on non-compliant businesses.
Lufax debuted on the New York Stock Exchange days before China’s most sweeping regulatory crackdown on the tech sector, illustrated by the torpedoing of Ant Group Co.’s IPO in late 2020.
Domestic regulations continue to weigh on China’s fintech sector. Lufax shares have fallen around 70% since their October 2020 debut, compared to a 51% drop for the ARK Fintech Innovation ETF.
Lufax, once among China’s largest peer-to-peer lenders, was forced to diversify into more traditional offerings including wealth management and retail lending after Chinese authorities launched a sweeping crackdown on the P2P sector for four years ago.
(Updates with Lufax share movement in the fourth paragraph)
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