HK broker Futu files confidentially for New York IPO of up to US$500m: sources

Hong Kong

FUTU Securities International, a Hong Kong-based online brokerage firm backed by Tencent Holdings, has filed confidentially for a US initial public offering (IPO) of up to US$500 million, people with knowledge of the matter said.

Futu, which allows investors to primarily trade stocks in Hong Kong and the United States, plans to make a public filing in the coming weeks and debut in New York in early 2019, the people said. The company is targeting a valuation of about US$2.5 billion, one of the sources added.

Futu, founded in 2012 by one of Tencent's earliest employees Li Hua, has been seen by some investors as the Chinese equivalent of Robinhood, a US-based online brokerage startup backed by Sequoia Capital and DST Global.

Apart from Tencent, Futu also counts venture capitalists Sequoia Capital China and Matrix Partners China as its backers, according to data provider Crunchbase.

In 2017, it raised US$145.5 million in its last fundraising round at a valuation of about US$1 billion, according to Chinese media reports.

It has hired Goldman Sachs and UBS to work on the US float, the sources said. Futu did not respond to a request for comment, while Goldman and UBS declined to comment.

Refinitiv publication IFR reported in June that Futu was in discussions with banks over a potential IPO that could raise US$300 million to US$500 million in Hong Kong or the US.

Despite its connections to Hong Kong-listed Tencent, Futu opted for New York partially because of a faster listing pace and the soggy performance of most new listings in Hong Kong, said one of the people.

Just six of Hong Kong's biggest 20 IPOs this year were trading above their offer prices a month after debut, Dealogic data shows, versus 16 on the New York Stock Exchange and 10 on Nasdaq.

"For Futu, it makes more sense to list in the US, which has better comparable peers and allows confidential filings. It doesn't have to disclose key business and financial information to the market and rivals at the beginning," the person said. "It's also easier to lure more US-based new investors and raise its profile overseas as a New York-listed firm."

The US Securities and Exchange Commission allows firms, regardless of their revenue, to file a draft IPO registration statement confidentially before they unveil their financials.

Ride-hailing firm Uber has recently filed confidentially for its US IPO, sources have said.

Futu's total trading volume had exceeded HK$1.5 trillion (S$263 billion) as of June, a fifteen-fold increase compared to that of June 2015, its website showed.

Its planned listing comes after Tencent Music Entertainment , the music arm of Tencent, last week raised nearly US$1.1 billion in its US IPO after postponing the deal from mid- October, because of a steep global stock market selloff and fears of slowing global growth.

In total, Chinese companies have raised 9.1 billion from US IPOs so far this year - the biggest amount since 2014, the year of Alibaba Group's record US$25 billion IPO, according to Refinitiv data. REUTERS