BOSTON (BLOOMBERG) - Surging valuations for Chinese fintech startups are about to turn micro-lending tycoon Min Luo into the country's latest IPO billionaire.
Luo, 34, founder and chief executive officer of online loan provider Qudian Inc, owns about a fifth of the company, which hopes to raise as much US$825 million (S$1.12 billion) in a US initial public offering this month. The price range values the business at a minimum of US$6.3 billion based on the shares it will have outstanding after the offering, and gives Luo a net worth of at least US$1.2 billion, according to the Bloomberg Billionaires Index.
China attracted the lion's share of the US$10.2 billion in venture capital that flowed into fintech businesses globally through September 2016, a Citigroup report found. Chinese companies received 46 per cent of that funding in the same period, putting them ahead of their US peers, which captured 56 per cent of the funding during all of 2015.
Luo, who founded two other websites and received a bachelor's degree from Jiangxi Normal University in 2004, formed the fintech business three years ago. Qudian targets the millions of young people in China under-served by financial firms and in need of credit for discretionary spending. The company makes its loans almost entirely via mobile devices.
Qudian representatives didn't respond to requests for comment.
In the first half of 2017, the Beijing-based business was China's leading provider of consumer credit online, according to a report from consultant Oliver Wyman that was commissioned by the company. Qudian handled 38.2 billion yuan (S$7.83 billion) in transactions for 7 million active borrowers in that period, it said in its initial offering prospectus. Nearly 60 per cent of its transactions in 2016 had annualized interest rates above 36 per cent.
The Qudian offering follows the IPO for ZhongAn Online P&C Insurance Co, a consumer insurer selling policies that protect everything from smartphones to cars. ZhongAn shares jumped as much as 18 per cent on the first day of trading late last month. The company's market capitalization was US$16.7 billion on Monday, more than ten times its book value.
Ant Financial, which is controlled by Alibaba Group Holding founder Jack Ma, is the world's most valuable fintech startup, according to the Citigroup report. The closely held business was valued at US$60 billion in a 2016 funding round, and holds 13.8 per cent of ZhongAn and will own 11.4 per cent of Qudian after the offering.