China's 9F Sets Terms Ahead of $84.6 Million IPO in New York

The company, which provides lending and wealth management services in an all-in-one platform, is expected to lift off in trading on the New York Stock Exchange on August 15.

Belinda Zhou
    Aug 09, 2019 1:00 PM  PT
China's 9F Sets Terms Ahead of $84.6 Million IPO in New York
author: Belinda Zhou   

9F Inc., a leading digital financial account platform, has announced the terms of its initial public offering in New York, scheduled for August 15.

The Beijing-based company will offer up to 8.9 million American depositary shares, expected to sell in the price range of between $7.50 and $9.50 per ADS. At the top end, 9F will raise $84.6 million, according to its prospectus filed Thursday with the U.S. Securities and Exchange Commission.

CLSA Ltd. and China Investment Securities International Brokerage Ltd. have joined Credit Suisse Securities (USA) LLC, Haitong International Securities Group Ltd. and 9F Primasia Securities Ltd. as the underwriters securing the deal. They may purchase up to an additional 1.3 million ADSs for over-allotments, according to the filing.

9F provides a comprehensive range of financial products and services through one single digital financial account, covering loan products, online wealth management products and payment facilitation services. 

In its prospectus, 9F highlighted its core product named One Card, which users can use to purchase products from more than three million merchants through China UnionPay and its own online shopping platform One Card Mall. One Card users can also draw cash at approved credit limits to meet other financial needs. 

9F has diversified its funding sources by developing a direct lending program last year. Specifically, 9F turned to institutional funding partners. As a result, the percentage of loans funded by institutions has increased significantly from approximately 11 percent in the quarter through March to 58 percent for the three months ended June. In April, the company has stopped charging service fees from borrowers under the direct lending program.

The company said its revenue in the first quarter reached $179.4 million, up 10 percent from the corresponding period in 2018. Revenue from loan facilitation services was $155.4 million in the first quarter, while post-origination services brought in $12.1 million. Net income was $73.7 million in the three months through March, soaring 89 percent from a year ago, according to the report.

The delinquency rate by balance, which indicates overdue payment ratio and risk control, has dropped significantly since 2016. The rate declined to 0.06 percent, 0.12 percent, 0.32 percent and 0.18 percent from 0.82 percent, 0.91 percent, 0.57 percent and 1.42 percent for 15-30, 31-60, 61-90 and 91-180 calendar days.

As to the proceeds from its IPO, 9F said it intends to invest 25 percent of the funds in strengthening its financing ecosystem, 25 percent in broadening product offerings, 20 percent in investing in research and development, 20 percent in international expansion and the rest in general corporate purposes. 9F also said it plans to expand investment in Hong Kong and Southeast Asia, applying for additional licenses overseas.

The company has applied to be traded on the New York Stock Exchange under the ticker symbol "JFU."