China’s fintech firms eye overseas IPOs to fund growth as regulations tighten at home

A new wave of initial public offerings (IPOs) by mainland Chinese financial technology (fintech) companies is taking shape as dozens of unprofitable technology start-ups rush to raise funds overseas amid tightened regulations at home.

The A-share market, due to its profitability requirements, remains off-limits to most Chinese fintech firms, particularly peer-to-peer (P2P) lending platforms that were once regarded as an important part of the mainland’s reform of the banking system.

Depositors’ dwindling interest in chasing returns from P2P operators following a raft of scandals over the past two years point to hard times ahead for many of the companies despite their ambitions of serving the country’s cash-hungry small businesses and individuals.

The increasing demand for financing has prompted a clutch of fintech firms to kick off their overseas IPO processes, most of which plan to complete fundraising in the next 12 months.

“An increasing number of fintech IPOs in Hong Kong and the United States are expected to take place,” said Gao Jianbin, a PwC partner. “They mainly aim to list in the US, though Hong Kong is also an option.”

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, is seeking to raise as much as US$1.5 billion via a Hong Kong IPO.