Morning Report: The first of this week’s IPOs priced recently and begins trading today. Here’s what you need to know.
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The company sold an expected 11 million shares, implying a raise of $104.5 million not inclusive of a greenshoe offering of 1.65 million shares (per the company’s most-recent F-1/A filing). If X Financial’s underwriters exercise those shares, the full IPO raise would reach $120.2 million.
That final figure is far under the firm’s original hopes to raise $250 million through its IPO (the $250 million figure can be found here in the firm’s filings, and in media coverage). As such, the IPO can be viewed as a partial disappointment, at least as a fundraising mechanism.
X Financial is a peer-to-peer lending platform that has grown quickly in recent years while posting profits. The firm is worth around $2.9 billion at its IPO price.
Its shares will begin trading today on the New York Stock Exchange under the ticker symbol “XYF.”
Why This Matters For Startups
X Financial’s IPO brings another sliver of liquidity to a bloated global startup ecosystem that has shunned the public markets in recent years. For startups, therefore, X Financial going public lessens collective pressure to provide investor liquidity.
But even more, X makes it plain how open the domestic public markets are today. Yes, the firm had to price in the lower tiers of its range, but a company that I suspect effectively zero Americans know about is going public today worth billions. Hell, even Crunchbase doesn’t have investors on file for the firm.
If you are an American startup you have as open a shot at an IPO now as you probably will for years. Especially if the markets hiccough.
Finally, I’d would argue that X’s profitability helped make it an attractive offering. But NIO, another recent Chinese IPO, was unprofitable as hell when it went public and had far less operating history than X. So, who knows. What we do know is that investors are still hungry for tech shares.
Next up: Eventbrite and Farfetch.
Illustration: Li-Anne Dias