Ping An's Lufax Close to Raising Funds at $18 Billion Value

Updated on
  • Company selling about 5 percent stake for almost $1 billion
  • P2P broker drew demand for five times the amount it raised

Lufax, a Chinese peer-to-peer lender and broker, is close to completing a round of fundraising valuing the company at about $18 billion, securing its position as the world’s most valuable financial technology startup, people with knowledge of the matter said.

The company, which recently changed its name to Lu.com, is raising almost $1 billion by selling a stake of about 5 percent to a group of Chinese and overseas investors, according to one of the people. Lufax attracted investor demand for about five times the amount it raised, the person said, asking not to be identified as the information is private. 

China’s finance sector is going through sweeping changes after years of government control, with new entrants such as Lufax and Baidu Inc. introducing innovative and cheaper services. Lufax, officially called Shanghai Lujiazui International Financial Asset Exchange Co., was started four years ago and is run by former McKinsey & Co. consultant Gregory Gibb.

Lufax is seeking an initial public offering in the second half of next year, the person said.

Most Valuable

Shanghai-based Lufax was valued at $10 billion in March, when it raised $500 million in a private placement that already made it the most valuable financial startup, according to data compiled by CB Insights.

Shares of Lufax’s biggest shareholder, Ping An Insurance (Group) Co., rose 1.6 percent to HK$41.90 at 11:44 a.m. in Hong Kong. They’ve advanced about 6 percent this year, bucking the 21 percent decline in the benchmark Hang Seng China Enterprises Index. Lufax spokeswoman Fan Ruqian declined to comment, while a representative for Ping An didn’t immediately respond to an e-mail seeking comment.

Lufax ranked 11th in a KPMG list of 50 leading fintech firms around the world, released on Tuesday, with the firm cited for its fast growth and smart use of big data and new technology. The company was among six Chinese firms in the ranking, published by KPMG and investment firm H2 Ventures.

Biggest Threat

The biggest threat to Lufax will come from technology giants Baidu, Alibaba Group Holding Ltd. and Tencent Holdings Ltd., which are moving to open their own banks, sell wealth-management products and offer other financial services, according to consulting firm Kapronasia. Lufax may have an advantage because of its experience in building up credit and risk management from its loan portfolio, said Zennon Kapron, managing director of the Shanghai-based consultancy.

Total transactions on Lufax in the first nine months of this year jumped more than ninefold from a year earlier to 926.4 billion yuan ($143.4 billion) as it seeks to become China’s best Internet finance platform, according to Ping An’s third-quarter report. That includes about 30 billion yuan in peer-to-peer lending, according to the report.

There are 3,769 peer-lending platforms in China that have lent 8.3 billion yuan to 16 million people, according to Yingcan Group, a Shanghai-based consultancy. About a third have some sort of financial trouble, Yingcan wrote in a November report.

— With assistance by Dingmin Zhang, Jonathan Browning, and Shai Oster

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