Chinese peer-to-peer lender and broker Lufax is seeking to raise about US$1 billion in a round of funding that would value the company at between US$15 billion and US$20 billion, according to a person familiar with the matter.
The Shanghai-based company has begun approaching possible investors and wants to finish by early next year, said the person, who asked not to be named because the matter is private.
Ping An Insurance Group Co (中國平安), the company’s biggest shareholder, is not planning to participate in this round, the person said. There is no guarantee Lufax will be able to raise all the money, and any deal might not be completed. Lufax was valued at US$10 billion in March, when it raised US$500 million in a private placement.
China’s finance sector is going through sweeping changes after years of government control, with new entrants such as Lufax and Baidu Inc (百度) introducing innovative and lower-priced services.
“The advantage Lufax has is its technology on the back end, it is sophisticated and mature,” said Zennon Kapron, managing director of the Shanghai-based consultancy Kapronasia.
Run by former McKinsey and Co consultant Gregory Gibb, Lufax would be the most valuable financial start-up in the world at its proposed valuation, according to a database by CB Insights.
A spokeswoman for Lufax declined to comment. A spokeswoman for Ping An said the company makes no comment on market talk.
There are 3,769 peer lending platforms in China that have lent 8.3 billion yuan (US$1.3 billion) to 16 million people, according to Yingcan Group (盈燦公司), a Shanghai-based consultancy. About a third have some sort of financial trouble, according to Yingcan’s November report.
The biggest threat to Lufax will come from technology giants Baidu, Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd (騰訊), which are all moving to open their own banks, sell wealth management products and offer other financial services, Kapron said.
Lufax might have an advantage because of its experience in building up credit and risk management from its loan portfolio, Kapron said.
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