PPDAI eyes IPO in the US

[Photo/VCG]

PPDAI Group, a Chinese peer-to-peer lending platform, applied for an initial public offering on the New York Stock Exchange under the symbol "PPDF" to raise up to $350 million, according to a prospectus filed with the US Securities and Exchange Commission and released on Friday local time.

The Shanghai-based company said Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc are acting as lead underwriters for the offering. Up to now, no pricing terms or offering amount have been disclosed.

Launched in June 2007, PPDAI is one of the first online consumer finance platforms in China connecting borrowers and investors. It focuses on serving borrowers between the ages of 20 and 40, many of whom have very limited or nonexistent credit records. By offering short-term loans to borrowers, the company gradually establishes their credit history through activities on its platform.

As of June 30, PPDAI had over 48 million registered users, the prospectus said. The company said revenues are primarily earned from fees charged to borrowers for helping them match with investors.

PPDAI turned a net loss of 72.1 million yuan ($10.95 million) in 2015 to a net profit of 501.5 million yuan in 2016, and continued to increase its net profit to 1.05 billion yuan in the first half of this year. Meanwhile, its operating revenues grew from 353.9 million yuan in the six months ending with June 30, 2016 to 1.7 billion yuan in the first six months of this year.

At the same time, there are risk factors listed in the prospectus, such as the evolving regulatory framework for the online consumer finance industry bringing an uncertain future, and high interest rates of certain loans exceeding the statutory interest rate limit, making them unenforceable in the China's judicial system.

The relevant laws and regulations stipulate enforceability applies to interest rates at 24 percent per year or lower, while those portions above 24 percent per year undertake risks and the parts which exceed 36 percent are invalid and void.

Although the interest rates of all PPDAI's loan products are no more than 36 percent per year, certain loans facilitated by the platform have interest rates over 24 percent per year, the prospectus stated.

PPDAI's IPO application comes after online credit firms Hexindai Inc and Qudian Inc filed to list American depositary shares, or ADSs, on Sept 29 and Sept 18 respectively. And internet-only insurance firm ZhongAn Online Property and Casualty Insurance Co Ltd saw its share price jump 18 percent on its Hong Kong Stock Exchange's debut Sept 28.

Ant Financial Services Group, the financial affiliate of Alibaba Group Holding Ltd, backed ZhongAn and Qudian, while PPDAI has stakeholders like Sequoia Capital, Lightspeed China Partners and Legend Capital.