Credit Suisse-Backed Online Lender to Plan $500 Million IPO

Updated on
  • Fintech firm working on IPO weeks after closing funding round
  • China-focused WeLab selects banks to advise on share sale

An online lender backed by Credit Suisse Group AG is working on a listing just weeks after closing a private funding round.

WeLab Ltd. has picked banks to advise on a Hong Kong initial public offering that could raise about $500 million, according to people with knowledge of the matter. The China-focused lender, whose backers also include billionaire Li Ka-shing, is aiming to list as soon as next year, the people said, asking not to be identified because the information is private. 

The company is preparing an offering as Chinese authorities intensify a crackdown on one part of the country’s fintech industry that offers short-term, high-interest loans to borrowers with poor credit histories. News that China has halted further approvals for online micro-lenders has already driven down the New York shares of firms like Qudian Inc. and PPDAI Group Inc.

Billionaire Li’s CK Hutchison Holdings Ltd. is the largest shareholder in TOM Group Ltd., which was among investors in a $20 million fundraising round for WeLab in 2015. TOM Group shares rose 3 percent to HK$2.05 at the close Friday in Hong Kong, the highest in more than a year, while the benchmark Hang Seng Index gained 0.5 percent.

Alibaba Fund

No final decisions on an IPO have been made, and there’s no certainty the deliberations will result in a transaction, the people said. A representative for WeLab declined to comment. 

The Hong Kong-based company raised $220 million of private funding earlier this month. The World Bank’s International Finance Corp. and the Alibaba Entrepreneurs Fund, backed by China’s biggest e-commerce operator, were among investors that participated.

Read more: China’s War on Online Cash Lenders Reverberates in New York

WeLab runs a mobile app that analyzes users’ phone habits to assess creditworthiness, often making a decision within a day. The company’s lending rate is “on average about 10 percent to 20 percent annualized,” Chief Executive Officer Simon Loong said last year.

The company has also attracted investments from Sequoia Capital and Malaysian sovereign fund Khazanah Nasional Bhd. The firm, which operates the Wolaidai platform in China and the WeLend service in Hong Kong, has 25 million users and has processed $28 billion of loans since it was founded in 2013, its website shows.

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