June 14, 2018 / 9:30 AM / 6 months ago

Exclusive - China's Lufax aims to raise up to $2 billion amid IPO delay: sources

HONG KONG (Reuters/IFR) - China’s Lufax aims to raise up to $2 billion (1.49 billion pounds) in fresh funding, valuing one of the country’s largest online wealth management platforms at $40 billion, as it opts for private investment ahead of a delayed listing, said people familiar with the deal.

FILE PHOTO: A sign of wealth management platform Lufax is seen during an expo in Beijing, China December 11, 2015. REUTERS/Stringer/File Photo ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT.

Lufax, set up in 2011 by top insurer Ping An Insurance Group Co of China Ltd (601318.SS) (2318.HK), is working with advisors to raise equity of at least $1 billion, said the people, who declined to be identified as fundraising plans are not public. They did not disclose potential investors or time frame.

The firm, formally Shanghai Lujiazui International Financial Asset Exchange Co Ltd [IPO-SLJZ.HK], seeks to fund growth while its initial public offering (IPO) is on hold due to changing regulation in consumer lending, a core business, the people said.

Lufax declined to comment.

Lufax hired five banks to work on an IPO in Hong Kong to raise up to $5 billion in the first half of 2018, Reuters publication IFR reported in December.

It postponed the IPO amid uncertainty in consumer lending as authorities formulated regulation for the fast-growing sector under a broader campaign to curb financial risk, sources said.

Under a proposal circulated in December, online micro-lenders will need to be licensed and will be prohibited from lending to borrowers with no sources of income or no specific purposes for the funds.

Lufax has grown into a broader wealth management company but consumer lending remains a core part of operations. Its loan balance was 157 billion yuan ($24.55 billion) at the end of May, showed Online Lending House, a Chinese tracker of online financial firms.

Increased regulatory attention to consumer finance has prompted online financial firms to alter their focus. Lufax peer Ant Financial, valued at $150 billion in a recent funding round, has shifted emphasis to technology services.

Lufax raised $1.2 billion in its last funding round in 2016, valuing the firm at $18.5 billion.

Some existing shareholders are also looking to sell Lufax shares - about $30 million worth at a valuation above $30 billion - because of the IPO delay, said one of the people.

Existing investors include BlackPine Private Equity Partners Fund LP, CDH Investments and Guotai Junan Securities Co Ltd (601211.SS), according to data provider Crunchbase.

Reporting by Julie Zhu, Kane Wu and Fiona Lau of IFR in HONG KONG; Additional reporting by Engen Tham and Shu Zhang; Editing by Jennifer Hughes and Christopher Cushing

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