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Lexinfintech delays US IPO pricing as China reins in micro-loan sector: source
Chinese consumer lending firm Lexinfintech will delay the pricing of its planned Nasdaq IPO to conduct more due diligence, a source with direct knowledge of the situation said - a move that comes after Beijing issued new rules to tighten control of the micro-loan sector.
China's financial regulators on Friday circulated new regulations to local governments targeting fast-growing online micro-lenders, that include a ban on loans to borrowers who have no source of income.
The crackdown comes amid criticism that users of small, unsecured "cash loans", which can be issued by mobile phone apps, are vulnerable to exaggerated advertising and aggressive debt collection.
Lexinfintech, which focuses on loans to educated young adults between 18 and 36 including loans for e-commerce purchases, had been planning raise some IUS$500 million in its IPO.
It filed its prospectus last month and had been planning to make its market debut on Dec. 12, the source said.
The source, who was not authorised to speak to the media and declined to be identified, did not say how long the IPO was likely to be delayed.
A representative for Lexinfintech said the company "continues to work toward those objectives as described" in its filing.
The prospect of a crackdown has weighed on shares of U.S.-listed Chinese micro-lenders.
On Friday, shares of China Rapid Finance Ltd plunged 18.9 per cent while PPDai Group Inc shares dropped 8.3 per cent. Shares in Qudian Inc, which is 11 per cent owned by Alibaba Group affiliate Ant Financial, rose 1.3 per cent after it said it endorsed the new rules and announced a $300 million share buyback.
Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for more than 85 per cent of all such activity globally last year, according to the Cambridge Centre for Alternative Finance.
The boom in micro-lending comes as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to data from the central bank, which says about half a billion consumers do not have a credit score.