Fintech overseas IPO trend sustains pace

In line with the trend in 2017, a number of Chinese fintech companies filed for an initial public offering or listed on stock exchanges in the United States and Hong Kong, market data showed.

Fintech firms such as 51 Credit Card Inc, VCredit Holdings Limited and Huifu Payment Limited listed on the main board of the Hong Kong bourse this year.

Pintec Technology Holdings Ltd, an independent technology platform enabling financial services in China, listed on the Nasdaq Stock Market on Oct 25.

Before Pintec, Golden Bull Limited, a Shanghai-based online finance marketplace that connects individual lenders with individual and small business borrowers, also listed on Nasdaq on March 20.

Compared with Chinese mainland's A-share market, the US and Hong Kong stock markets have lower requirements on corporate financial data. Bourses overseas encourage innovative enterprises with high growth potential to list.

The US stock market also has relatively lower compliance requirements, but stresses that issuers should fully disclose risks, and investors should make their own judgment, said Jiang Zhihui and Sun Haotian, partners of the law firm King & Wood Mallesons, in a research report.

"On the mainland, fintech is an emerging industry and relevant regulations are still improving. Fintech companies are not yet accepted by the A-share market, not to mention that certain fintech firms do not meet the A-share market's requirement on profitability, so most of them chose to file for an IPO in the US or Hong Kong," said the report.

"By getting listed, fintechs will consolidate previous achievements in development and will take the IPO as an opportunity to rectify nonstandard businesses so that they will meet compliance requirements. Besides, the status of listed companies will be helpful for them to obtain the relevant qualification accreditation or file for record under tightened regulations," the report said.

William Wei, founder and CEO of Pintec, said: "Many fintechs that started in 2013 or 2014 have become mature regarding their business models and directions for development, laying sound foundations for their IPOs."

He said Pintec will gain more credibility among the clients and more external recognition after making its debut on Nasdaq. It will also become more standardized in many areas, including financial affairs, internal audit, human resources and corporate culture to meet requirements that are stricter than before.

Despite their enthusiasm for capital markets, many listed fintech companies have seen a drop in their share prices since listing this year.

For instance, the share price of 51 Credit Card Inc closed at HK$4.05 ($0.52) on Friday, down 55 percent from HK$9.1 on July 13. Pintec shares also fell from $12.49 on Oct 25 to $10.6 on Thursday, partly due to a market downturn, according to people with knowledge of the matter.

"Short-term share-price fluctuations do not mean anything," said Wei. "The performance of a listed company depends on its products, service capability and long-term value of investment. A valuable company will gain market recognition during market upturns."