The Shanghai-based company is planning a share offering in Hong Kong to raise proceeds for its business expansion, making it the latest Chinese company to seek a listing closer to home amid the risk of being dropped from U.S. exchanges.
360 DigiTech , which counts Morgan Stanley as a major shareholder, said in a filing to the Hong Kong bourse that it will use the offering proceeds to upgrade its technology and credit-assessment capabilities, expand its user base and fund general corporate needs, among other purposes.
It didn't specify a timeline for the offering nor the amount it seeks to raise. The draft prospectus comes almost four years after 360 DigiTech listed on the Nasdaq, where its shares currently trade 7.6% below their first closing price in 2018.
The company said in the prospectus that under U.S. rules, it is at risk of being delisted from the Nasdaq in the coming years if U.S. officials are unable to inspect its auditors in China.
360 DigiTech, through its app 360 Jietiao, links financial institutions, consumers and small businesses with services in credit assessment, fund matching and others. It had more than 41 million users with approved credit lines as of end-June, and has cumulatively made loans for more than USD 168 billion to 25.6 million borrowers, it said.
Its primary source of revenue comes from service fees to financial institutions. Revenue in 2021 rose 23% to about CNY 16.6 billion (USD 2.35 billion), while revenue in the first six months of 2022 rose 12% to CNY 8.5 billion, it said.
Morgan Stanley holds a 5.4% stake in the company, while China-focused private-equity firm FountainVest China holds a 7.5% stake.
Jefferies said in a recent research note that it expects 360 DigiTech to serve small and medium enterprises, "a large addressable market worth over CNY50 trillion, about half of which is unmet."
The investment bank has a buy rating on the company's American depositary shares and forecasts a 0.9% rise in revenue this year in U.S. terms. It projects a 4.9% rise in 2023, down from the 15% previously forecast in light of macroeconomic headwinds.