Lufax Holdings, one of China's biggestpersonal finance services platforms, has filed to list its shares on the NewYork Stock Exchange, making it the third Chinese fintech firm to seek fundsfrom the capital market this year.

Though Lufax did not disclose anyfundraising details, but set a placeholder amount of $100 million. It is saidto become the largest fintech IPO in the U.S. this year, according to thepreviously rumored volume of 2 billion dollars to 3 billion dollars.

Goldman Sachs, BofA Securities, UBSInvestment Bank, HSBC and China PA Securities are the lead underwriters to thecompany's offering.

It said it would use the funds fortechnology research and development, construction of infrastructure, technologyacquisition or mergers, as well as global expansion.

The largest fintech listing on the US stockmarket

According to available public information,Lufax completed its series C financing in December 2019, which amounted to$1.41 billion. Industry experts estimate that the company's valuation shouldhave reached $39.4 billion after the series C funding round.

Ping An has a 42.3 percent stake in Lufaxat present, according to public information. The insurer supports Lufax infinancial services, product distribution, value-added services, user acquisition,licenses and technologies. The company has also been able to tap the 210million customers of Ping An, a large number of whom are small business owners,middle-income people and affluent investors.

Ping An Group saw its share prices rise by0.38 percent to HK$80.3($10.4) on Thursday at the Hong Kong bourse. Its shareson the Shanghai bourse will resume trading on Friday after the eight-daynational holiday.

While peer-to-peer lending used to be themainstay of its business, Lufax has been actively diversifying its activitiesrecently. Online lending valued at 336.4 billion yuan ($49.5 billion) in 2017accounted for 72.9 percent of the company's total wealth management business.However, the ratio fell to 12.8 percent during the first six months of thisyear.

By seeking closer cooperation withinstitutions, Lufax has enriched its product portfolio by rolling out moremutual fund, insurance, asset management, trust and private equity products.The value of the above products has grown from 125.3 billion yuan in 2017 to326.9 billion yuan by the end of last year.

Lufax joins Ant Group and JD DigitalTechnology Holding, two other Chinese fintech giants, in going for IPOs thisyear.

In early July, e-commerce platform JD'sfintech arm, Jingdong Digits Technology Holding Co Ltd, filed to float on theSTAR Market of the Shanghai Stock Exchange, planning to raise about 20 billionyuan. Ant Group, which operates the digital payment platform Alipay, announcedin late July its plan for dual listing in Hong Kong and Shanghai.

Unlike Jingdong Digits and Ant Group thatspecialize in network traffic, scenarios and technology application, Lufaxfocuses on middle income and affluent investors, providing larger-value creditand wealth management services.

A Fintech Empire

Lufax was established in 2011 as an onlineinvestment and financing platform under insurance giant Ping An Group. Thecompany now operates in China's retail credit and wealth management industries.According to Oliver Wyman, Lufax's two businesses ranked second and third inChina respectively.

The company posted a net profit of 1.07billion dollars for the first six months, with nearly 88 percent earned fromits technology platform. As of June 30, its outstanding balance of retailcredit facilitate stood at 76 billion dollars, and total client assetsgenerated through its online wealth management platform reached 55 billiondollars, according to the filing.

Lufax also operates Shanghai LujiazuiInternational Financial Asset Exchange, Chongqing Financial Assets Exchange,Qianhai Financial Assets Exchange, Ping An Puhui Enterprise Management andother affiliates.

The firm expanded and internationalized itsbusiness after founding Lu International Singapore Financial Asset Exchange in2017 to focus on overseas online wealth management services and secured threefinancial licenses in Hong Kong this year

Choosing to go public on the US stockmarket not only coincides with its business orientation, but also enablesinternational investors to gain familiarity with its business, thus paving theway for further growth of its international wealth management business, Yicai Globallearned from market participants.

Ping An Group and Tun Kung Company own 42.3percent and 42.7 percent of Lufax's ordinary shares. Tongjun Investment andLanbang Investment have 41 percent and 37.4 percent of the equity in Tun Kung.The prospectus confirms that Tongjun is a Ping An executive shareholdingplatform.

Most of the proceeds from the IPO will goto further building Lufax's tech infrastructure, technical research,development, investment and acquisition and other sci-tech outlays, the firm saidin its filing.

Xie Yonglin, Ping An's president and jointCEO, said at the Lujiazui Forum in June that Lufax has been defined as afintech company, which will offer wealth management services to more clientsand provide financing to small and medium-sized enterprises.

Data from market consultancy Oliver Wymanshowed the total assets managed by Lufax reached 378.3 billion yuan by the endof September, which is the third largest among all nonconventional Chinesefinancial service providers.

IPO amid rising China-U.S. tensions

Lufax's New York listing comes against thebackdrop of a number of Chinese companies looking to reconsider their listingson U.S. exchanges amid rising U.S.-China tensions.

"Tensions between the U.S. and Chinahave escalated due trade disputes, the COVID-19 outbreak, sanctions imposed bythe U.S. Department of Treasury on certain officials of the Hong Kong SpecialAdministrative Region and the central government of the PRC and the executiveorders issued by U.S. President Donald J. Trump in August 2020 that prohibitcertain transactions with certain Chinese companies and theirapplications," Lufax detailed in its filing.

In addition, lawmakers in Washington arepushing for greater scrutiny of Chinese companies through proposed legislationthat threatens to delist some firms in the U.S.

"Any of these factors could have amaterial adverse effect on our business, prospects, financial condition andresults of operations," Lufax said in the filing.

In order to avoid the risk of listing inthe U.S., some Chinese concept stocks have begun privatized delisting orsecondary listing in Hong Kong. Zero2IPO Research statistics showed that 15Chinese concept stocks have planned for such capital operations and five ofthem have completed privatization or secondary listing as of mid-September.

Why did Lufax choose to file a U.S. listingat this time?

According to market analysts, the U.S.listing is more in line with Lufax's own business characteristics, and ishelpful for international investors to get familiar with its business, pavingthe way for further development of its international wealth managementbusiness.

Lufax established an international arm ofLu Global in 2017 in Singapore and obtained three financial licenses in HongKong this year. Its business have gradually gone overseas and becomeinternational.

The company's desire to obtain a highervaluation may also be a factor, as investors in the U.S. stock market caneasily understand its type of business, for there are many internet finance-relatedlisted companies in the market.

Lufax was valued at 38 billion dollarsbefore its latest fundraising in 2018.

The IPO follows the listing of OneConnectFinancial Technology, another fintech company backed by Ping An, which raised312 million dollars in December 2019.