December 21, 2017 / 6:22 PM / a month ago

UPDATE 1-Chinese online lender LexinFintech surges in US market debut

(Updates with CFO quote, industry background, updates shares)

By Diptendu Lahiri

Dec 21 (Reuters) - Chinese online lender LexinFintech Holdings Ltd’s shares surged in their U.S. market debut on Thursday, brushing aside worries related to Beijing’s recent crackdown on the booming micro-credit industry.

LexinFintech’s shares touched a session high of $14.88, a 53 percent jump from its IPO price that valued the Shenzhen-based company at $4.51 billion.

The company, which was looking to take advantage of the industry boom, slashed its IPO by two-thirds last week from its initial estimate of raising $500 million following the clampdown.

China is trying to put the brakes on the blistering yet haphazard growth of the country’s online micro-lenders, unveiling tougher rules in recent weeks, including a ban on loans to borrowers who have no source of income.

The industry is booming amid rising Chinese incomes and limited access to credit cards.

LexinFintech sees tougher regulation of the industry as a positive as it would help raise the barrier to entry of newer players.

“People might over-react to the news, but these are regulations that will make this sector more robust,” Chief Financial Officer Craig Yan Zeng told Reuters.

Shares of micro-lenders such as Qudian, PPDAI Group and Jianpu Technology, which have recently listed their stocks on U.S. exchanges, have been hit hard due to the crackdown.

Shares of Qudian are down about 57 percent and PPDAI about 46 percent since going public in October. Jianpu, which listed its stock in November, is down 19 percent.

LexinFintech initial public offering was priced at the low end of the $9 to $11 per American depositary share range, raising $108 million.

The company provides loans to young educated adults aged between 18 and 36, including loans for online shopping.

The CFO said the company’s loans are offered at a competitive interest rate of 25 percent, compared with the industry threshold of 36 percent.

Existing LexinFintech shareholders including K2 Partners and Chinese e-commerce firm JD.com Inc have expressed interest in buying $28 million of its shares at the IPO price, according to the company filing.

LexinFintech shares pared some of their early gains to trade up 19.44 percent at $10.73.

Bank of America Merrill Lynch, China Renaissance, Deutsche Bank and Goldman Sachs were joint bookrunners on the IPO.

Reporting by Diptendu Lahiri in Bengaluru; editing by Sai Sachin Ravikumar and Anil D'Silva

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