China's Up Fintech trades up after $104m US IPO

The company sold 13 million American Depository Shares (ADS) at $8.00 apiece, according to a filing, above the indicative range of $5-7. In its first day of trading on March 20 the stock opened at $9.48 and continued to climb throughout the day, closing at $10.92. None of Up Fintech’s private equity backers, which include ZhenFund, Orient Hontai Capital, and K2 Ventures, exited in the offering.

Concurrent to the IPO, Up Fintech also completed a private placement of Class A ordinary shares, 15 of which are worth one ADS, with existing investor IB Global Investments, raising $7 million. IB Global is part of the Interactive Brokers Group, Up Fintech’s primary clearing agent.

Up Fintech was founded in 2014 to provide online brokerage services for Chinese investors to trade shares listed on domestic exchanges, as well as in the US and Hong Kong. The company provides trade order placement and execution, margin financing, account management, and investor education through its web portal and its app. It claims to be the largest China-focused online broker in terms of US securities trading volume, with a market share of 58.4% in 2017.

As of the fourth quarter of 2018, the platform had 1.6 million registered users, with a total account balance of $2.4 billion and trading volume of $36.9 billion. Revenue for the year ended December 2018 came to $33.6 million, up from $16.9 million the year before. Over the same period the company’s net loss grew from $7.5 million to $43.2 million.

Proceeds from the offering will primarily be used to invest in product and technology research and development, along with acquisitions or investments in technologies and companies that complement Up Fintech’s core business. The company will also use the new capital to expand into new territories.

Up Fintech has raised nearly $135 million since its founding, according to AVCJ Research, including a RMB500 million ($75.3 million) Series C round last year from Prospect Avenue Capital, Orient Hontai, and Oceanpine Capital. Zhenfund has participated in several rounds, most recently a RMB100 million Series B round in 2017 led by China Growth Capital.

The company’s largest external shareholder is Xiaomi, which owns 252 million shares, representing an 11.1% stake following the IPO. IB Global holds 151 million shares. The size of other investors’ holdings has not been specified.

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• Topics
• Greater China
• North America
• IPO
• Financials
• Technology
• China
• USA
• Exit
• Financial Services
• TMT
• Oceanpine Capital
• ZhenFund
• K2VC