China’s Lufax Prepares to Meet Global Market

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Euromoney, March 2017

It started out as one of 3,000 peer-to-peer lenders in China. In six years, it has become a broad wealth management platform that may raise as much as $5 billion in an international IPO this year. The pace of its growth has been every bit as breathtaking as Tencent’s WeChat or Alibaba’s Alipay, yet few outside China have heard of it. They will. CEO Gregory Gibb tells us why.

Lufax is the unacknowledged dynamo of Chinese internet banking. BAT – Baidu, Alibaba and Tencent – get all the press as they convert e-commerce and social media businesses into emergent financial service enterprises with customer bases the size of continents. But Lufax, which is preparing what could be Hong Kong’s biggest IPO of the year, is in some ways the most interesting of them all.

Founded in 2011, Lufax – known locally as Lujiazui, or in full, Shanghai Lujiazui International Financial Asset Exchange – started out as a peer-to-peer lender. That is not unusual. As many as 3,000 P2P businesses were operational in China by 2015, although many have since vanished or collapsed.

But Lufax had two distinguishing features: the backing of the Ping An group and a great deal of ambition.

Six years on, it has expanded to become a large wealth management, consumer finance and institutional trading business, with 25.5 million registered users, Rmb390.92 billion ($57 billion) of retail assets and Rmb111.65 billion of loans under management. As is the way of Chinese internet finance business, its growth numbers border on the absurd. In the nine months to September 30, 2016, its number of registered users was up 39.3% from the start of the year, number of active users rose 80.4%, retail transaction volume was up 239.3% and institutional transactions up an astonishing 428.8% (to Rmb3.22 trillion).

“These guys,” says a bank economist in Beijing, “are going to be the death of the bank deposit in China.”

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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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