VC-backed LexinFintech files for US IPO

The company has filed its prospectus but has not disclosed the size or pricing of the offering. Net proceeds of the IPO will be used primarily for general corporate purposes, including investments in product development, technology infrastructure, and sales and marketing activities. A portion may also be used for acquisitions of complementary technologies or businesses, though the company says it has no plans for such purchases at this time.

Shenzhen-based LexinFintech is primarily known for its consumer lending platform Fenqile, established in 2013. The platform targets college students and educated young adults aged 18-36 in China. This group has been underserved by traditional financial institutions, which lack the ability to properly assess young borrowers’ credit status and to offer financial products to meet their credit needs.

Fenqile mainly provides loans that allow borrowers to buy goods online and pay in installments. It works with e-commerce platforms such as JD.com and technology suppliers such as Apple to distribute their items through the Fenqile platform. Since its founding, the company has originated RMB60.1 billion ($9 billion) in loans, with RMB31.3 billion in the nine months ended September 2017 alone. As of September, the company’s outstanding principal balance of loans was RMB15.9 billion.

For the year ended December 2016, LexinFintech recorded RMB4.3 billion in operating revenue, up from RMB2.5 billion the year before. Over the same period, the company’s net loss dropped from RMB310 million to RMB118 million.

According to AVCJ Research, LexinFintech received angel funding in April 2014 from Matrix Partners and China Renaissance K2 Ventures, followed by a $10 million Series A round that August. In December of that year, DST Global led a $100 million Series B round for the company with participation by Matrix, China Renaissance, and Bertelsmann Asia Investment. Additional investors include JD.com and Huasheng Capital.

Currently, China Renaissance holds a 15.3% stake in LexinFintech, with Matrix holding 12% and JD.com holding 11.9%. None of the investors will exit in the IPO.

LexinFintech’s filing follows the listing of micro-lending services provider Qudian, previously known as Qufenqi, which has also raised capital from VC investors and strategic backers including the Alibaba Group’s financial services affiliate Ant Financial. Qudian raised $900 million in its IPO last month and subsequently gained 22% in its trading debut.

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• Topics
• Greater China
• IPO
• Financials
• Technology
• China
• Financial Services
• Matrix Partners
• China Renaissance
• Bertelsmann Asia Investments