International non-bank financial company Home Credit has revealed plans of an initial public offering (IPO) in Hong Kong. The popular consumer financing and lender, which counts China as its largest market, is likely testing the waters in the region's equities market following its success in Asia.
The company's filing was submitted on Monday just two days after Anheuser-Busch InBev canceled its planned Budweiser listing in Hong Kong. Home Credit is apparently aiming to raise around $1 billion for its planned IPO. If the company reaches its target, Home Credit's IPO will become one of the largest offerings for the year on the Hong Kong bourse.
According to the company's filing to the Hong Kong Exchanges and Clearing (HKEX), the funds that will be raised in the IPO will be used to increase the firm's capital base. This will, in turn, be used to greatly expand the firm's lending activities, particular in its operations in Southeast Asia and China.
The company also plans to greatly enhance its use of advanced technologies such as data analytics and artificial intelligence. According to the company, the use of these types of technologies in its processes has helped it reduce the median time for loan decisions to under 30 seconds.
The Netherlands-based consumer and personal loans company was established in 1997. The company mainly focused its operations in nine emerging markets in Europe and Asia. The firm has so far found success in its operations in countries such as India, the Philippines, Russia, and China.
Unlike traditional banks, the company mainly offers its services to people with little or no credit history. The company offers point-of-sale loans in shops, department stores, and dedicated retailers for items such as televisions, smartphones, and home appliances.
Additionally, the company also offers hassle-free cash loans and revolving loan products. Many of the company's customers are first time borrowers, who traditionally do not have existing accounts or loans. Last year, the company reported total loads of over $22.82 billion.
Around 68 percent of its loans were from repeat customers. Home Credit reported a total net income of $642.85 billion for its 2018 fiscal year ending in March. This was a drastic increase from the $358.02 it earned in the previous year.
China is currently the company's largest market, accounting for 64 percent of its outstanding loans. As of March of this year, outstanding loans from its Chinese business have reached over $15.09 billion. Home Credit first introduced its services in China in2007. The company has since expanded its Chinese business, penetrating markets in major cities and provinces.
