Online Broker Futu Confidentially Files for US IPO

The broker is targeting a valuation of around $2.5 billion, people familiar with the matter have said.

Futu Securities International, an online brokerage based in Hong Kong, has confidentially filed for a United States initial public offering (IPO) of up to $500 million, a report from Reuters claims.

The article, which cites people familiar with the matter but keeps their identity anonymous, said that Futu is planning to make the public filing in the coming weeks to allow for a debut in New York early next year.

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Before a firm needs to reveal their financials, the US Securities and Exchange Commission allows companies to confidentially file a draft IPO registration statement, regardless of their revenue.

Futu is an online brokerage platform which facilitates the trading of US and Hong Kong-listed stocks by individual Chinese investors. The firm was established in 2012 by one of Tencent’s earliest employees Li Hua has received backing by Tencent Holdings, a Chinese multinational investment holding conglomerate.

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According to the report, the online broker is aiming for a valuation of around $2.5 billion. The company has also hired Goldman Sachs and UBS to work on the US listing. However, both Goldman Sachs and UBS have declined to comment.

Futu Chooses America over Hong Kong

Despite Futu’s connections to Tencent, which is a Hong Kong-listed firm, one of the sources said the broker has chosen New York to list for two reasons – the quicker listing pace and the sluggish performance of many new listings in Hong Kong.

According to data from Dealogic, a financial markets platform, only six out of the 20 largest IPOs in Hong Kong were trading above their offer prices one month after their debut. This is a much weaker performance than 16 on the New York Stock Exchange and ten on Nasdaq.

The source said: “For Futu, it makes more sense to list in the U.S. 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. It’s also easier to lure more U.S.-based new investors and raise its profile overseas as a New York-listed firm.”

According to the report from Reuters, Futu did not respond to requests for comment.

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