Lufax, Ping An Insurance’s online wealth management platform, aims to raise up to US$2 billion in funds despite shelving its planned IPO.
The company, which is valued at US$40 billion, is opting for private investment after deciding to postpone its public listing, said sources cited by Reuters.
Lufax, which was established by Ping An in 2011, is working with advisors to raise over US$1 billion in equity, the sources said. They refused to be identified as the fundraising plans have not yet been opened to the public. Potential investors have yet to be revealed.
In December, Lufax hired five banks to set up a Hong Kong IPO for the first half of 2018. It aimed to raise US$5 billion, but was later forced to postpone the listing due to Beijing’s campaign to minimise risk in the financial sector. The campaign could potentially affect Lufax’s peer-to-peer lending business.
While Lufax has diversified into wealth management, consumer lending still makes up a large chunk of its business. Data from Online Lending House, a tracker for online financial firms in China, showed that Lufax has RMB157 billion (US$24.55 billion) in loan balance.
Stricter regulations have forced many online financial firms in China to shake up their business models. Alibaba-backed Ant Financial, one of Lufax’s competitors, shifted its focus to fintech services.
In its most recent funding round in 2016, Lufax raised US$1.2 billion. However, due to the delayed IPO, some existing shareholders have started looking to sell their shares, worth around US$30 million, one of the sources revealed.
