HK-based broker Futu files for US IPO of up to $685m

HONG KONG • Futu Securities International, a Hong Kong-based online brokerage firm backed by Tencent Holdings, has filed confidentially for a US initial public offering (IPO) of up to US$500 million (S$685 million), people with knowledge of the matter said.

Futu, which allows investors to primarily trade stocks in Hong Kong and the United States, plans to make a public filing in the coming weeks and debut in New York next year, the people said. The company is targeting a valuation of about US$2.5 billion, one of the sources added.

Futu, founded in 2012 by one of Tencent's earliest employees Li Hua, has been seen by some investors as the Chinese equivalent of Robinhood, a US-based online brokerage start-up backed by Sequoia Capital and DST Global.

Apart from Tencent, Futu also counts venture capitalists Sequoia Capital China and Matrix Partners China as its backers, according to data provider Crunchbase. Last year, it raised US$145.5 million in its last fund-raising round at a valuation of about US$1 billion, according to Chinese media reports.

It has hired Goldman Sachs and UBS to work on the US float, the sources said. Futu did not respond to a request for comment, while Goldman and UBS declined to comment.

Refinitiv publication IFR reported in June that Futu was in discussions with banks over a potential IPO that could raise US$300 million to US$500 million in Hong Kong or the US.

Despite its connections to Hong Kong-listed Tencent, Futu opted for New York partially because of a faster listing pace and the soggy performance of most new listings in Hong Kong, said one of the people.

Just six of Hong Kong's biggest 20 IPOs this year were trading above their offer prices a month after their debuts, Dealogic data shows, versus 16 on the New York Stock Exchange and 10 on Nasdaq.

"For Futu, it makes more sense to list in the US, which has better comparable peers and allows confidential filings. It doesn't have to disclose key business and financial information to the market and rivals at the beginning," the person said.

The US Securities and Exchange Commission allows firms to file a draft IPO registration statement confidentially before they unveil their financials.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 20, 2018, with the headline 'HK-based broker Futu files for US IPO of up to $685m'. Print Edition | Subscribe