Chinese peer-to-peer lender and broker Lufax is seeking to raise about $1 billion in a round of funding that would value the company at between $15 billion and $20 billion, according to a person familiar with the matter.
The Shanghai-based company has begun approaching possible investors and wants to finish by early next year, said the person, who asked not to be named because the matter is private. Ping An Insurance (Group) Co, the company's biggest shareholder, is not planning to participate in this round, the person said. There is no guarantee Lufax will be able to raise all the money, and any deal may not be completed. Lufax was valued at $10 billion in March, when it raised $500 million in a private placement.
China's finance sector is going through sweeping changes after years of government control, with new entrants such as Lufax and Baidu Inc introducing innovation and lower-priced services. Lufax, which started four years ago and is officially Shanghai Lujiazui International Financial Asset Exchange Co, has emerged as the leader in the country's booming peer-lending market in which borrowers get matched with investors.
"The advantage Lufax has is its technology on the back end, it's sophisticated and mature," Zennon Kapron, managing director of the Shanghai-based consultancy Kapronasia.
Run by former McKinsey & Co consultant Gregory Gibb, Lufax would be the most valuable financial startup in the world at its proposed valuation, according to a database by CB Insights.
A spokeswoman for Lufax declined to comment. A spokeswoman for Ping An said the company has no comment on market talk.
There are 3,769 peer lending platforms in China that have lent 8.3 billion yuan ($1.3 billion) to 16 million people, according to Yingcan Group, a Shanghai-based consultancy. About a third have some sort of financial trouble, according to Yingcan's November report.
The biggest threat to Lufax will come from technology giants Baidu, Alibaba Group Holding Ltd and Tencent Holdings Ltd, which are all moving to open their own banks, sell wealth management products and offer other financial services, Kapron said.
Lufax may have an advantage because of its experience in building up credit and risk management from its loan portfolio, Kapron said.
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