Lexinfintech slashes U.S. IPO size as China reins in micro-lenders

By Umesh Desai

HONG KONG (Reuters) - Chinese consumer lending firm Lexinfintech has slashed the size of its U.S. initial public offering by two-thirds to a maximum possible $151.8 million, following a recent crackdown by Beijing on fast-growing online micro-lenders.

Lexinfintech, which focuses on loans to educated young adults between 18 and 36, including loans for online shopping, said in November it planned to raise up to $500 million in an IPO on the Nasdaq.

China's financial regulators are attempting to curb unwieldy growth at the nation's online micro-lenders, unveiling tougher new rules over the past month including a ban on loans to borrowers who have no source of income.

In a U.S. securities filing on Wednesday, Lexinfintech said it would sell 12 million American Depositary Shares at a price of between $9 and $11 each. The price range suggests an issue size of between $108 million and $132 million.

It said it could realise up to $151.8 million from the offering upon exercise of overallotment options and $122.3 million after deducting expenses. The filing did not disclose when Lexinfintech will list.

When asked about the lower IPO size, Lexinfintech said in an email the $500 million figure it cited in November was for the purpose of determining the registration fee and that the number of shares being offered and the price range had not been estimated then.

Lexinfintech had an outstanding principal balance of $2.39 billion on its books as on September 30, 2017. On-balance sheet loans amounted to $1.67 billion and assets totaled $1.89 billion which were partially funded by short term debt of $1.51 billion.

The company has about 3.3 million customers with an average customer loan balance of $887.

Micro-lending is booming in China as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to central bank data.

China's online cash loan sector is projected to reach 2.9 trillion yuan by 2020, according to consultancy Oliver Wyman.

But authorities have launched a crackdown amid criticism that users of small, unsecured "cash loans", which can be issued by mobile phone apps, are vulnerable to exaggerated advertising and aggressive debt collection.

Shares of other U.S.-listed Chinese online micro-lenders have tumbled since late November when some of the new rules were first introduced.

Qudian, China Rapid Finance and PPDAI Group were worst hit, falling by 10 percent to 30 percent after the changes, before staging a partial recovery.

(Reporting by Umesh Desai; Editing by Edwina Gibbs and Muralikumar Anantharaman)