Lufax rides internet finance boom
Ping An unit to position itself as broad financial services platform for wealth management
Lufax, the peer-to-peer (P2P) lending arm of Ping An Insurance, is transforming itself to become an open platform for trading broad selections of financial assets, leveraging the boom in internet finance.
When Lufax, the short form of Shanghai Lujiazui International Financial Asset Exchange, started in 2011, the only product was P2P lending. "But now we are trying to be a much broader open platform," Gregory Gibb, the chairman of Lufax, told the South China Morning Post.
"We can work together with funds, insurance companies and financial licence holders to bring in more selections of assets."
Lufax's change comes amid Ping An's plan announced last month to consolidate online and offline businesses. It will bring together Lufax, Ping An's online direct loan business and the credit guarantee insurance business unit of Ping An Property & Casualty Insurance, strengthening its consumer finance services arm.
Lufax will not run its offline team after the consolidation but focus on online business covering broader asset categories, while its offline support will come from Ping An. Doing offline and online business together would need more resources, Gibb said, but Lufax saw no need to do so.
The model for P2P business in the coming two to three years would be an offline-to-online model, he said. Ping An, which has more than 20 different financial licences, could help Lufax in sourcing assets.
Ping An's consolidation was an idea by Ma Mingzhe, the chairman of Ping An, the country's second-largest insurer.
"Historically, we were raising cows and selling milk, meaning that we were deciding the products and selling the products," Gibb cited Ma as saying.
"What we want to do now is to be a milk market. So other people can raise the cow, we just want to sell the milk. This is the strategy of the Ping An group as a whole," he said, and Lufax is following and positioning itself as a financial services platform for wealth management.
"[Lufax's business] will be more investment-banking-oriented, more fee-oriented," Gibb said, and banking on the wealth management needs of sophisticated investors.
Lufax's P2P lending business posted significant growth, with outstanding loans up to 14 billion yuan last year from three billion yuan in 2013, Gibb said.
"We still expect to see three to five times growth this year, and this is only part of our business under the open-platform strategy," he said.
The growth of transactions in funds and other products was even faster, posting a 20 times increase last year from 2013, Gibb said, and he expects the momentum to continue this year.
"Years ago, no one thought internet finance could build that fast and could sell products online," he said. He estimated 30 times growth in the size of internet finance in the next five years.
With the outstanding registered users under Lufax having surpassed eight million so far this year, Gibb expects the number to increase to about 20 million this year.
Despite the strong growth in business, Gibb said the company did not have a time line for an initial public offering.
"Lufax doesn't really need money, and Ping An has a lot of money," he said. "We are not rushing to get [a listing] to raise funds, we just want to be the strongest."