China Fintech Firm Is Said to Mull Fate of $500 Million IPO

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  • Online lending platform to confer with advisers this weekend
  • Investor questions have focused on Chinese regulatory climate

LexinFintech Holdings Ltd., owner of Chinese online lending platform Fenqile, plans to meet advisers this weekend to discuss the fate of its proposed U.S. initial public offering, people with knowledge of the matter said.

The company aims to decide whether to imminently start its IPO roadshow or wait for a later date when market sentiment may be better, according to the people. Investor questions during LexinFintech’s pre-marketing this week focused on the regulatory climate for online lenders in China, the people said, asking not to be identified because the information is private. 

LexinFintech filed earlier this month for an IPO with an initial $500 million fundraising target, a placeholder amount used to calculate registration fees that could change. It plans to list on the Nasdaq Global Market under the symbol LX.

News of fresh regulatory scrutiny on some parts of the Chinese online-lending industry emerged this week as regulators in Beijing escalate their campaign to reduce risks in the country’s $40 trillion financial-services sector. An earlier announcement that China halted approval for new internet cash-loan businesses has pummeled shares of Qudian Inc. and PPDAI Group Inc. in New York trading.

Beijing-based Qudian fell as much as 18 percent in New York trading Friday. Shares of Jianpu Technology Inc., which runs a financial product marketplace, dropped as much as 13 percent, and online consumer lending companies China Rapid Finance Ltd. and Yirendai Ltd. slid as much as 9.4 percent and 7.3 percent, respectively.

‘Happy Installment’

LexinFintech had already scheduled this weekend’s meeting before the latest reports emerged, according to the people. The company may set its IPO price range this weekend if it decides to go ahead, one of the people said.

A spokesman for LexinFintech declined to comment, citing a regulatory quiet period due to the company’s IPO.

LexinFintech, which was started in 2013, runs an online shopping mall that lets users purchase products such as mobile phones and pay over time. Its Fenqile platform, whose name means “Happy Installment” in Chinese, targets young adults who are eager to buy consumer products yet can’t afford to pay in full. Fenqile transactions are funded by institutional partners as well as the company’s online investment platform, called Juzi Licai, according to its IPO prospectus.

Investors in LexinFintech include Inc., the operator of China’s second-biggest online mall, and Chinese insurer Taikang Insurance Group Inc., its prospectus shows. Russian-born billionaire Yuri Milner’s DST Global led a 2014 funding round for the business, Fenqile’s website shows.

LexinFintech issued loans with an effective annual percentage rate of 25.3 percent and an average duration of 9.4 months during the first three quarters of 2017, according to its prospectus.

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