Chinese home loan provider CNFinance seeks to raise $200m in US IPO

CNFinance
Traders work on floor of the New York Stock Exchange (NYSE) shortly before the close of trading in New York, U.S., December 13, 2016. REUTERS/Lucas Jackson

Guanghzou-based CNFinance Holdings Ltd, a home equity loan service provider in China, seeks to raise up to $200 million in an initial public offering (IPO) in the US.

CNFinance’s filing with the US Securities and Exchange Commission (SEC) did not specify the number of American Depository Shares (ADS) that it intends to offer but said the target would be to raise $200 million in total.

It plans to list on the New York Stock Exchange under the symbol CNF.RC., with JP Morgan and Credit Suisse as the joint bookrunners on the deal.

The company said it plans to use the net proceeds of the offering for working capital and other general corporate purposes. It also intends to hold its net proceeds in short-term, interest-bearing, financial instruments or demand deposits, pending the use of the funds.

CNFinance, which claims to be the second largest home equity loan service provider among non-traditional financial institutions in China, was founded in 1999 and booked $581 million in revenue for the 12 months ended March 31, 2018.

The primary target borrower segment of the lender is MSE owners who own real properties in Tier 1 and Tier 2 cities in China. These MSE owners typically have quick cash flow turnover from their business operations with high demand for working capital, CNFinance said.

“Their financing needs are often unpredictable, time-sensitive and frequent. Our target borrowers are underserved by traditional financial institutions. Traditional financial institutions often impose stringent and inflexible loan application requirements designed for large corporations, making it difficult for MSE owners to meet such requirements,” the firm said.

CNFinance joins a number of Chinese firms seeking to raise capital through an IPO in the US.

In June, Cango, an online used car platform based in Shanghai, filed to raise up to $300 million in an IPO in the US.

Norwegian online browser Opera, which was bought by a Chinese consortium for $600 million in 2016, also filed for an IPO on the Nasdaq, seeking to raise $115 million.

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