Microlender Qudian Eyes Huge Offshore IPO

(Beijing) — Online microlender Qudian is taking steps for an offshore initial public offering (IPO) to raise more than $500 million as soon as the first quarter of next year, becoming the first of a new generation of privately owned Chinese financial service companies to list.

Qudian has recently hired a chief financial officer and investment bank, which are typical steps that a company makes in the months before a listing, said a source with direct knowledge of the situation, speaking on condition of anonymity.

The company was valued at between $1 billion and $2 billion at the time of its last funding earlier this year, its sixth so far. It would be looking to raise $500 million or more in the offering, with New York as the strongest possibility, the source said.

That would make it the largest IPO by a Chinese internet company in New York since Alibaba's blockbuster $25 billion offering in September 2014. It would also be the largest by a Chinese firm in New York since parcel delivery company ZTO Express raised $1.4 billion last month.

Founded just two years ago, Qudian rose to prominence on the back of its Qufenqi service, which makes loans that typically total around 1,000 yuan ($145) each to college students looking to buy things like computers, bicycles and smartphones. The company later diversified into a wider customer base of young consumers who often want to make similar-sized purchases but have little or no access to credit.

Qudian now reportedly issues 100 million yuan worth of loans per day, which translates to the equivalent of well over $5 billion in loans a year.

Qudian is part of a new generation of privately funded financial service firms to proliferate in China over the last five years, as Beijing opens up a sector once dominated by big, slow-moving state-run banks in a bid to make it more nimble.

One of the private sector's earliest players is Ant Financial, the financial services affiliate of e-commerce giant Alibaba and itself an investor in Qudian. Ant's core asset, the Alipay electronic payments service, is hugely popular among online shoppers and is increasingly challenging the state-owned UnionPay in traditional stores.

Ant has also said it wants to make an IPO in Hong Kong, though it hasn't given a specific timetable. P2P lender Lufax is another major player in the space, and previous reports have indicated the 5-year-old company is aiming to make a Hong Kong IPO that could raise up to $5 billion sometime next year.

Contact reporter Doug Young (dougyoung@caixin.com); editor Kerry Nelson (kerry@caixin.com)