Ping An's Lufax Close to Complete Fundraising valued at $18 Billion

Lufax, a Chinese peer-to-peer lender and broker, is close to completing a round of fundraising valuing the company at about US$18 billion, according to people with knowledge of the matter. The company, which recently changed its name to Lu.com, is raising almost US$1 billion from the sale of a roughly 5 per cent stake.

Bloomberg reports that, Lufax attracted investor demand for about five times the amount it raised, the person said, asking not to be identified as the information is private.

China's finance sector is going through sweeping changes after years of government control, with new entrants such as Lufax and Baidu Inc. introducing innovative and cheaper services. Lufax, officially called Shanghai Lujiazui International Financial Asset Exchange Co., was started four years ago and is run by former McKinsey & Co. consultant Gregory Gibb. Lufax is seeking an initial public offering in the second half of next year, the person said.

According to Yahoo Finance, Shanghai-based Lufax was valued at $10 billion in March, when it raised $500 million in a private placement that already made it the most valuable financial startup, according to data compiled by CB Insights.

Shares of Lufax's biggest shareholder, Ping An Insurance (Group) Co., rose 1.6 percent to HK$41.90 at 11:44 a.m. in Hong Kong. They've advanced about 6 percent this year, bucking the 21 percent decline in the benchmark Hang Seng China Enterprises Index. Lufax spokeswoman Fan Ruqian declined to comment, while a representative for Ping An didn't immediately respond to an e- mail seeking comment.

Business Times says that, Lufax was valued at US$10 billion in March, when it raised US$500 million in a private placement.

The biggest threat to Lufax will come from technology giants Baidu, Alibaba Group Holding Ltd. and Tencent Holdings Ltd., which are moving to open their own banks, sell wealth- management products and offer other financial services, according to consulting firm Kapronasia. Lufax may have an advantage because of its experience in building up credit and risk management from its loan portfolio, said Zennon Kapron, managing director of the Shanghai-based consultancy.

There are 3,769 peer-lending platforms in China that have lent 8.3 billion yuan to 16 million people, according to Yingcan Group, a Shanghai-based consultancy. About a third of them have a financial trouble. Representatives for Lufax and Ping An Insurance (Group) Co, its biggest shareholder, didn't immediately respond to e- mails seeking comment.