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Ping An-backed Lufax defies geopolitical tension with $2.4bn US IPO

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Lufax, one of China’s largest online lenders, raised $2.36bn in one of the biggest US stock market listings this year, a sign of the enduring allure of a New York listing for Chinese businesses despite the charged political situation between the two countries.

The Shanghai-based company’s shares slid as much as 14 per cent in their first minutes of trading on the New York Stock Exchange on Friday, as the broader stock market declined, although they had recovered to trade flat by early-afternoon.

Lufax sold 175m American depository shares at $13.50, at the top of the range marketed to investors, valuing it at $32.9bn.

Lufax was founded in 2011 and is backed by the Ping An Insurance Group, one of China’s largest private companies. It focuses on consumer and small business lending and its wealth management arm targets China’s emerging middle class by linking fund managers with more than 12m local investors.

The company had net income of $1bn in the first six months of the year.

“We still felt the US was the right place to start for us in terms of getting the right investor exposure, getting the best analyst coverage, and the broader branding that comes with it,” Gregory Dean Gibb, Lufax chief executive, said in an interview with the Financial Times.

Column chart of Proceeds from IPOs in the US by Chinese businesses ($bn) showing Chinese companies raise most in US stock market listings since 2014

Heightened tensions between Washington and Beijing have spilled over into capital markets this year with officials from the Trump administration discouraging US investment in some Chinese companies and calling for reforms targeted at Chinese companies listing in New York.

US securities regulators and policymakers have zeroed in on how Chinese-based groups are audited after the accounting scandal at Luckin Coffee. In May, the Senate passed a bill that would require Chinese companies to comply with US accounting rules.

China does not allow auditors in the country to share their work with foreign regulators.

Some large Chinese companies have spurned the US in favour of a domestic IPO. Ant Group, the Alibaba-linked payments company, chose a joint listing in Hong Kong and Shanghai, where it will raise more than $30bn in the biggest IPO on record next week.

Lufax is the fifth-largest IPO in the US this year, according to data provider Dealogic. Excluding the blank cheque company offerings that have dominated the US listings business this year, the Lufax IPO could rank as the second-largest in the US if underwriters sell additional shares in the coming days, trailing only cloud database provider Snowflake.

If bankers do sell those shares, as they traditionally do, it would also be the largest US capital raising by a Chinese-based company since Alibaba’s $25bn in 2014, Refinitiv data showed.

Line chart of Share price ($) showing Lufax shares drop at the open before rebounding



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Soho House owner files for New York flotation

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The owner of Soho House, the private members’ club, has filed for an initial public offering, as the company seeks to tap into investors’ growing interest in leisure stocks.

Membership Collective Group, which owns 28 Soho Houses worldwide among other properties and a retail brand, said on Monday that it plans to list its shares on the New York Stock Exchange under the ticker “MCG”.

The company said in a filing with the Securities and Exchange Commission that it intends to raise $100m, a figure that is often used as a place holder for calculating registration fees. It has yet to determine the number of shares it will offer or a price range for those shares.

A rebound in travel and dining demand heading into summer, bolstered by vaccinations against Covid-19, has stoked speculation that MCG will target a valuation greater than the $2bn marker set in a $100m funding round last year.

The hospitality group, backed by US billionaire Ron Burkle, said its membership numbers held steady through the pandemic. It retained 92 per cent of Soho House members in the 2020 financial year and received more than 30,000 applications for its membership brands, according to the S-1 filing.

Revenues in the first quarter of this year totalled $72m, down from $142m in the same period a year earlier. It also reported a net loss of $93m, compared with a $45m loss in 2020.



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South Korean video game group behind hit ‘PUBG’ aims for $5bn IPO

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The company behind global hit game PlayerUnknown’s Battlegrounds plans to raise up to Won5.6tn ($5bn) in an initial public offering that is expected to be South Korea’s largest ever.

Krafton said in a regulatory filing on Wednesday that it will sell more than 10m shares at Won458,000-Won557,000 each, with the top end of that range giving it a market capitalisation of Won28tn. The IPO price will be set on July 9 ahead of the company’s listing in Seoul on July 22.

The much-anticipated listing is likely to top that of Coupang, the leading South Korean ecommerce company that raised $4.6bn in New York in March.

Krafton, formerly known as Bluehole, was founded by Chang Byung-gyu in 2007. PUBG, a so-called battle royale game in which players fight to the death on a remote island, was released in 2017 and accounts for the bulk of Krafton’s revenues. The game has sold more than 75m copies across PC and consoles, while its mobile version has been downloaded more than 1bn times. Krafton’s operating profit more than doubled to Won774bn last year as sales jumped more than 50 per cent to Won1.67tn.

However, the company cited uncertainty in overseas expansion and domestic regulation as investment risks.

“Despite our successful experience in entering overseas markets, our past experience does not guarantee our future success given the different language, culture, custom and legal, regulatory environment,” Krafton said in its filing.

South Korea is on track for a record year for IPOs on huge retail investor interest. The benchmark Kospi index is trading near all-time highs, buoyed by ultra-low interest rates and the country’s strong economic recovery from Covid-19. Investment bankers have predicted that proceeds from IPOs will more than quintuple to at least Won25tn in 2021.

Other IPOs in the pipeline include LG Energy Solution, the world’s largest electric vehicle battery maker, which is expected to raise Won10tn-Won15tn in September. Hyundai Heavy Industries, a shipbuilder, is likely to raise $1bn-$1.5bn in August. Smaller deals include the IPOs of Kakao Pay and Kakao Bank, units of the country’s dominant messenger service provider.

“The Krafton IPO will be popular among investors, given investors’ growing interest in new growth areas such as EV batteries, games and online businesses,” said an investment banker close to the deal. “But the company is heavily reliant on just one game and it is uncertain how long the game’s popularity will last.”

Some analysts have raised concerns about Krafton’s high valuation based on its IPO pricing.

“Krafton’s valuation seems stretched, considering that its market cap will surpass NCSoft’s, although NCSoft is making more money than Krafton,” said a local analyst referring to one of the company’s competitors.

Krafton plans to use the IPO proceeds to develop new games, acquire other developers, enter markets including India and the Middle East and invest in technologies such as artificial intelligence.

After the IPO, Chang will hold a 14 per cent stake, followed by Chinese internet group Tencent with 13.2 per cent, according to company filings.

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Made.com valued at £775m in London IPO

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Shares in Made.com fell 8 per cent despite the company pricing them at the bottom of their range in its initial public offering on Wednesday, giving the online furniture retailer a market capitalisation of £775m.

The listing follows the recent debuts in London of online greeting card group Moonpig and vintners Virgin Wines, which have accelerated sales thanks to stay-at-home consumers buying online during the coronavirus pandemic. Both those groups’ shares remain well ahead of their IPO prices.

Deliveroo’s £7.5bn IPO was branded one of the worst In London’s history, however, after its shares — already priced at the bottom end of the range — fell as much as 30 per cent in initial dealings. They remain more than a third below their IPO price.

“It’s a bit disappointing,” said one banker not involved in the Made.com IPO, adding that the 200p a share pricing was “some way below the levels that had been talked about”.

Valuations of up to £1bn had been mooted in the run-up to the listing.

“It’s got a large addressable market and a lot of share to go for, but historically it has wrestled with achieving profitability and scale in the UK market and it has gone ahead and pushed into international markets despite that,” the banker added.

Made.com sold 50m new shares in the IPO, raising £100m, while existing investors including co-founder Ning Li and Brent Hoberman sold 46.9m shares. A further 14.5m shares could be made available as part of the overallotment option. If exercised, that would increase the number of shares to 111.5m and 29 per cent of the issued share capital.

The shares traded conditionally in London on Wednesday, while full dealings will begin on Monday.

The homewares group aims to quadruple annual sales to £1.2bn by the end of 2025. The company has said it plans to invest proceeds from the IPO in marketing and supply chain improvements aimed at reducing the time between customer orders being placed and goods being delivered.

“The IPO is an exciting milestone for Made,” said chief executive Philippe Chainieux. “A listing in London, where the business was founded, will enable us to accelerate our growth.”

Made.com generated £315m in sales last year. The group, founded by entrepreneurs Ning and Hoberman in 2010, sells to about 1.2m active customers in the UK, Germany, Switzerland, Austria, France, Belgium, Spain and the Netherlands and plans to expand beyond Europe.

After admission, growth-focused investors Level Equity and Partech will be the largest investors in the group, holding 14 and 11 per cent respectively, followed by companies linked to Ning with 8.8 per cent.

Fund management groups Majedie, Axa and NFU Mutual will also be top-10 shareholders, while a vehicle controlled by Hoberman will own 5.5 per cent.

The float is the latest in an increasingly active IPO scene for so-called digitally native businesses.

Victoria Plumbing is due to float on London’s junior market early next week, with pricing details expected on Thursday, while shares in German online fashion retailer About You began trading in Frankfurt on Wednesday and Berlin-based online optician Mister Spex announced its intention to float on Monday.



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