China’s Online Finance Platforms Plan Overseas IPOs to Avoid A-Share Requirements

China’s Online Finance Platforms Plan Overseas IPOs to Avoid A-Share Requirements

Liao Shumin

Date: Mon, 10/16/2017 - 17:51 / source:Yicai
China’s Online Finance Platforms Plan Overseas IPOs to Avoid A-Share Requirements
China’s Online Finance Platforms Plan Overseas IPOs to Avoid A-Share Requirements

(Yicai Global) Oct. 16 -- Chinese fintech and online financing firms are turning to overseas stock exchanges due to difficulties listing in the domestic market. One has already floated in Hong Kong this year, and three more are looking to go public in the US.

Zhongan Online P & C Insurance Co. [HKG:6060] listed in Hong Kong on Sept. 28. Qudian.com Inc. (interim stock code [NYSE:QD]), Hexindai Inc. (interim stock code [NASDAQ:HX]) and Shanghai PPDai Financial Information Service Co. (interim stock code [NYSE:PPDF]) filed prospectuses with the US Securities and Exchange Commission on Sept. 19, Sept. 30 and Oct. 14 respectively.

Two Chinese internet finance firms, Yirendai Ltd. [NYSE:YRD] and China Rapid Finance Ltd. [NYSE:XRF], are already listed in New York.

Alibaba Group Holdings Ltd.’s [NYSE:BABA] financial arm, Ant Financial Services Group, is the largest shareholder in ZhongAn, with a 16.04-percent stake. It also holds 12.8 percent in Qudian, and is its fourth largest holder. Both rely on the Alibaba unit to generate business and user traffic.

There is a higher threshold for online finance companies to go public in the A-share market, an industry analyst said. Many platforms are choosing to list overseas so they can float sooner.

Under Chinese rules, companies planning to go public must have been active for several years and have been making profits for the last three years. Many domestic lending platforms can’t meet these requirements. PPDai has enjoyed sustainable growth over the past three years, but didn’t turn a profit until last year, which is why its heading overseas.

PPDai’s prospectus shows that it earned revenue of CNY1.73 billion (USD263 million) last year and netted profits of CNY501 million. In 2015, it lost CNY72 million.

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Keywords: ANT FINANCIAL, IPO, PPDai, Internet Finance, Fintech, Zhongan Online, Hexindai, Qudian, Overseas Listings