Chinese microlender Lexin files for a $500m US IPO

Lexin Fintech Holdings, an online microlending platform targeting young Chinese consumers, on Monday filed for IPO in the US to raise $500 million.

According to the company’s IPO prospectus, Lexin plans to list on Nasdaq under the stock code LX. The joint book runners include Goldman Sachs (Asia), BofA Merrill Lynch, Deutsche Bank, and China Renaissance.

Founded in 2013, the Shenzhen-based company taps the growing spending power of China’s younger generation and saw $810 million in revenue for the 12 months ended September 2017. Also, the company had 3.3 million active customers during the nine months ended September 2017, up 34% from the prior year, as Nasdaq’s website pointed out.

It’s worth noting that Lexin is backed by China’s e-commerce giant JD.com, which in March spun off its own lending unit, JD Finance, in a $2.1 billion deal.

The prospectus shows that Xiao Wenjie, Lexin’s founder and CEO, along with other senior executives together hold 37.3% share of the company. No pricing terms were disclosed.

China has seen a US IPO spree in the fintech sector. Qudian, which listed last month, raised around $900 million in an IPO in New York. It later, however, came under fire when local media began questioning the company’s sustainability and morality. Besides Qudian and Lexin, other Chinese micro lending players, such as PPDAI, Hexindai, and Rong360, have also filed with the SEC for a US IPO.

There is, however, growing risk in the microlending market as the data isn’t always reliable, customers are able to take out multiple loans from different lenders, and collection mechanisms are not yet robust.