Chinese Debt Collector YX Asset Recovery Postpones US IPO: Report

YX Asset Recovery, a Chinese firm that provides delinquent consumer debt collection services, has postponed its planned $81-million initial public offering (IPO) in the US, according to a Renaissance Capital report.

The reason for the deferment was not disclosed. Most Chinese firms that have cancelled their listings have cited “unfavourable market conditions.” In August, Samoyed Holdings, a finch firm that focuses on China’s credit card repayment market, withdrew its planned IPO in the US for the said reason.

The reported shelving of YX Asset’s IPO comes just two days after the company set the terms for its listing. It was planning to raise $81 million by offering 9.3 million American Depositary Shares (ADSs) at a price range of between $7.75 and $9.75 each.

The Changsha, China-based company had planned to list on the New York Stock Exchange and hired Deutsche Bank Securities, CMB International Capital, Raymond James, AMTD Global Markets and SunTrust Robinson Humphrey as the joint bookrunners.

Founded in 2015, YX Asset Recovery is the largest provider of delinquent credit card receivables recovery services in China in terms of total value of receivables under collection and number of collection specialists employed, according to iResearch.

The company collects delinquent consumer receivables such as credit card receivables originated by commercial banks and online receivables originated by online consumer finance companies. It primarily generates commission-based fees based on its collection success.

The firm booked $140 million in revenue for the 12 months ended June 30, 2019.

According to data from iResearch, China’s delinquent consumer receivables recovery market is in its early stage of development and has experienced a high rate of growth since 2013, compared to more mature markets such as that of the United States.

Total revenue generated by China’s delinquent consumer receivables recovery market grew at a CAGR of 48.5 per cent from 2013 to 2017, compared with a CAGR of 2.9 per cent in the US market during the same period.

YX Asset Recovery’s IPO deferment comes as the number of Chinese firms listed on the US exchanges has increased in recent years, as more companies mull going public driven by the country’s fast economic development.

According to financial data provider Wind, a total of 43 Chinese companies were newly listed in the US market last year, up from 24 in 2017 and 10 in 2016. Data compiled by Bloomberg showed 28 companies based in China or Hong Kong raised $3.25 billion in US IPOs this year, about half that from the same period in 2018.