Crushed By China’s P2P Crackdowns, Lufax’s Global Strategy Is Now Robo-Advisors

Crushed By China’s P2P Crackdowns, Lufax’s Global Strategy Is Now Robo-Advisors

by September 21, 2018

Just in March, Lufax had big aspirations towards launching an IPO that they hoped would raise its valuation to USD60 billion, a huge jump from when the company last valued at US$ 18.5 billion in 2016. Unfortunately, a rampant slew of Peer-to-Peer (P2P) scams spurred Beijing a crackdown that is slowly tanking the industry.

Lufax was set up in 2011 by Ping An Insurance Group, a diversified holdings company mainly dealing in insurance, banking and financial services.

Until recently, China was considered the largest P2P market in the world which helped companies like Lufax to rise, partly due to China’s lax rules in the area.

A report by ECNS revealed that a number of P2P lending platforms have been collapsing following the change. Names such as lianbijr and txlicai were investigated by the Chinese authorities, while lenders like Yilongcaifu collapsed under police investigation.

Due to these crackdowns, experts have warned investors against illegal financial activities that offer lucrative rewards.

Admist an uncertain market, Lufax postponed its IPO bid, but began seeking more investments to instead pivot into online wealth management—an interesting move since some of the companies that have shuttered their doors were also involved in online wealth management.

The pivot reportedly drew the interest of a sovereign fund, Qatar Investment Authority for its online wealth management side of the business though it seems negotiations are still underway.

So Lufax Has Its Eyes Set on the International Market

After setting up base in Singapore end of last year, Lu International, a global subsidiary of Lufax launches their first product—a wealth management platform.

The company had already obtained an operating license from the Singapore authorities in 2017, so it when its China business was in danger and its IPO a no-go, it was a strategic move for them to finally put real effort into getting their international presence off the ground.

While the Lufax is known for its Peer-to-Peer (P2P) lending business, Lu Global’s focus today is characterised as premium wealth management products, some which accept values lower than USD1,000. With varying entry barriers.

At present, there are 15 products on the platform, comprising a mixture of open-ended and closed-ended funds. Users are able to access Lu Global’s services via mobile app, and according to its website, any cash invested is held with DBS Bank Singapore.

Kit Wong, CEO at Lu International said:

lu global wealth management robo advisor kit wong lufax lu international ping an

“Our mission is to make investing intuitive, accessible and self-directed. Investors will experience this as they register themselves on Lu Global. From onboarding to selecting their investment portfolio, investors will be equipped with financial information sufficient to make sound investment decisions.”

“We are thrilled to launch Lu Global in Singapore. We’ve received overwhelming interest from potential investors, fund houses and distributor networks since we first announced our plans for Singapore.”

Its core business in China remains in P2P lending, but it seems like the company is playing it safe by venturing into wealth management, and seem to see more potential in their newer offering for their global entity. The company may be playing it safe in this region, due to the high number of Indonesian P2P lending firms that have been established and ready to expand in a market they are more familiar with.

Featured image via Lu Global