University of Manitoba LuFax Action Programs Case Study

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University of Manitoba

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This is a group project, only write my assigned part, don't need any introduction, background or conclusion.

Need total a 650 words, and need add a complete balanced scorecard.

The company our group choose to write is: LuFax (see attached file, give you some background information of this company)

Please focus write market on Southeast Asia such as Philippine, Malaysia. Don't need to write specific on one country, write the range of Southeast Asia market.

Very important:

Goals and Strategies: leverage low cost of reaching customers using social media and e-commerce, locally and internationally!!

My writing part is :

Action Programs (International expansion: Asia marketemerging marketseducational “institution”

The content of this section will vary from plan to plan, based on the specifics of each company’s strategic intent and the recommendations you laid out above. Develop a specific plan about how the business will meet its objectives and measure its success. Pick those aspects of implementation that are most important to your plan. Make sure you provide not only “what” has to be done, but “who” will be responsible, and by “when”. For example, you might need to address in your detail:

1. How do the unique attributes of your products and services translate into marketing activities that will be required?

2. What pricing strategy have you devised?

3. What target costing for your products have you established and what processes need to be put into place to ensure this target is met?

4. What marketing tactics and plans will be put in place?

5. What critical pieces of the value chain need to be managed as part of this strategy and how will this be accomplished? For example, if suppliers are critical to the success of the business, address who they might include, availability, quality considerations, lead times, credit requirements.

6. Measurements of Success: Outline the key financial and non-financial metrics by which you are projecting that your recommendations will be successful. These metrics need to make sense for the strategies and the action plan you are recommending for your business. For examples, what metrics have you defined to measure the success of the implementation, e.g. average order size, customer acquisition rate, etc. and how do those link to the specific initiatives in your action plan? Make sure you include a complete balanced scorecard.

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Table of Contents Filed Pursuant to Rule 424(b)(4) Registration No. 333-249366 175,000,000 American Depositary Shares Lufax Holding Ltd Representing 87,500,000 Ordinary Shares This is the initial public offering of American depositary shares, or ADSs, of Lufax Holding Ltd. We are offering 175,000,000 ADSs. Two ADSs represent one of our ordinary shares, par value US$0.00001 per share. Prior to this offering, there has been no public market for our ADSs or our ordinary shares. Our ADSs have been approved for listing on the New York Stock Exchange, or NYSE, under the symbol “LU.” See “Risk Factors” on page 20 to read about factors you should consider before buying the ADSs. PRICE US$13.50 PER ADS Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Initial public offering price Underwriting discount and commissions(1) Proceeds, before expenses, to us (1) Per ADS Total US$ 13.50 US$ 0.513 US$12.987 US$2,362,500,000 US$ 89,775,000 US$2,272,725,000 For a description of the compensation payable to the underwriters, see “Underwriting.” To the extent the underwriters sell more than 175,000,000 ADSs, the underwriters have a 30-day option to purchase up to an additional 26,250,000 ADSs from us at the initial public offering price less the underwriting discount. The underwriters expect to deliver the ADSs against payment in U.S. dollars to purchasers on or about November 3, 2020. Goldman Sachs (Asia) L.L.C. BofA Securities UBS Investment Bank Morgan Stanley J.P. Morgan CLSA BOCI Haitong International Stifel HSBC China PA Securities (Hong Kong) Company Limited Jefferies China Renaissance Prospectus dated October 29, 2020 KeyBanc Capital Markets Table of Contents Table of Contents Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY THE OFFERING SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA RISK FACTORS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA USE OF PROCEEDS DIVIDEND POLICY CAPITALIZATION DILUTION ENFORCEABILITY OF CIVIL LIABILITIES CORPORATE HISTORY AND STRUCTURE SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MARKET OPPORTUNITIES BUSINESS REGULATION MANAGEMENT PRINCIPAL SHAREHOLDERS RELATED PARTY TRANSACTIONS DESCRIPTION OF SHARE CAPITAL DESCRIPTION OF AMERICAN DEPOSITARY SHARES SHARES ELIGIBLE FOR FUTURE SALE TAXATION UNDERWRITING EXPENSES RELATED TO THIS OFFERING LEGAL MATTERS EXPERTS WHERE YOU CAN FIND ADDITIONAL INFORMATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 1 14 17 20 81 82 83 84 86 88 90 97 101 147 156 212 246 256 260 263 278 290 292 299 310 311 312 313 F-1 You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free-writing prospectus. We are offering to sell, and seeking offers to buy, the ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs. We have not taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside the United States. Until November 23, 2020 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. i Table of Contents PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under “Risk Factors,” before deciding whether to buy our ADSs. This prospectus contains information from a report commissioned by us and prepared by Oliver Wyman, an independent industry research firm, to provide information on the retail credit and wealth management industries in China. Our Business We are a leading technology-empowered personal financial services platform in China. Our mission is to make retail borrowing and wealth management easier, safer and more efficient. We primarily address the large unmet demand for personal lending among small business owners as well as salaried workers in China, and we provide tailor-made wealth management solutions to China’s fast growing middle class and affluent population. As of June 30, 2020, our total balance of retail credit facilitated reached RMB519.4 billion (US$73.5 billion), and the total client assets generated through our online wealth management platform reached RMB374.7 billion (US$53.0 billion), ranking us number two and number three, respectively, among non-traditional financial service providers in China such as fintech companies, online-only TechFin companies and online lending platforms, according to Oliver Wyman. China has the second largest financial system globally, both by retail credit lending volume in 2019 and by the total amount of investable assets as of December 31, 2019. The estimated demand for small business financing in China was RMB89.7 trillion (US$12.7 trillion) in 2019, of which RMB46.6 trillion (US$6.6 trillion) was unmet. In addition, the current outstanding balance of consumer loans in China is estimated to be RMB12.7 trillion (US$1.8 trillion) as of December 31, 2019. As of the same date, China’s personal investable assets reached RMB192 trillion (US$27 trillion), making it the second largest personal wealth management market globally, and only RMB49 trillion (US$7 trillion) or 26% has been placed in wealth management products. For more details, including sources, see “—Market Opportunities.” We are well positioned to capture markets which have been underserved by traditional financial institutions and online-only TechFin platforms backed by major internet companies, such as Ant Financial, WeBank and Tencent Licaitong. Many traditional financial institutions do not have the necessary skills, data and technology to fully address these customer needs, while online-only TechFin platforms, which provide financial services but are operated by tech companies rather than financial institutions, generally lack the financial data and financial services capability to price credit risk appropriately for borrowers and provide suitable products to investors. Our business is built on: • Unique capital-light, hub-and-spoke business model: We operate a scalable capital-light business model focusing on large, underserved, yet highly attractive segments. Our platform has two “hubs”, connecting hundreds of financial institution “spokes,” to facilitate lending and wealth management products tailored to individual customers’ needs and risk appetites. Our hubs are tied to an integrated account which accumulates users’ data to drive ongoing personalization of services. • Proven technology applications: Our distinctiveness is founded on our ability to develop purpose-built technology, combine it with our financial expertise, and embed these solutions throughout our business. With proprietary data accumulated over 15 years, we have created cutting-edge capabilities in know your product (KYP), know your business (KYB), and know your customer (KYC) to effectively assess risk and facilitate products to customers. These three areas leverage extensive data, AI applications, machine learning, and blockchain solutions to price credit and manage suitability-related risks effectively, and to deliver sophisticated digital customer services efficiently. Our strong 1 Table of Contents cooperation with the Ping An ecosystem allows us early access to ongoing investment in technology innovation in financial services, including through Ping An Group’s 8 research institutes and more than 21,000 patents and patent applications. • Deep financial services expertise: Our relationship with Ping An Group, a top 2 Fortune Global 500 financial institution by 2019 revenue, provides us with valuable access to its ecosystem. Through commercial relationships across the Ping An ecosystem, we benefit from potential access to Ping An Group’s approximately 210 million financial services customers, a proportion of which are small business owners and middle class and affluent investors. We also have collaboration with Ping An businesses, distribution channels, and product capabilities spanning insurance, investment, banking, and analytics. • Strong offline-to-online channel integration: Our deep integration across channels allows us to better meet the borrowing and wealth management needs of small business owners and middle class and affluent investors through a superior online customer experience complemented with the option of offline assistance. Combining our large direct salesforce of over 56,000 members and online telemarketing team of over 4,000 personnel, with our collaboration across the Ping An ecosystem, empowers us to provide more sophisticated services to small business owners and middle class and affluent investors more effectively than online-only TechFin platforms. • Through-the-cycle track record: Our strong performance through credit cycles demonstrates the benefit of our superior financial data and our ability to price and manage risk effectively relative to our online-only peers, as well as our ability to respond quickly and adjust our business effectively to regulatory changes. Moreover, we have delivered stable operating results through cycles. Over the three years from 2017 through 2019, our total balance of loans facilitated grew at a CAGR of 26.6%, while our total wealth management client assets, excluding legacy products, grew at a CAGR of 39.4%. Our stable growth, operating results, and superior credit quality over time highlight the caliber of our experienced management team and the clear benefits of our financial DNA. Unique Business Model: Technology-empowered Personal Financial Services “Hub & Spoke” Platform 2 Table of Contents We have implemented a unique, capital-light, hub-and-spoke business model combining purpose-built technology applications, extensive data and financial services expertise to effectively facilitate the right products to the right customers. • In terms of the retail credit facilitation hub, as of June 30, 2020, we have connected 13.4 million cumulative borrowers with more than 50 banks, trusts and insurers as spokes on our platform. We provide small business owners with convenient access to affordable, large-ticket-size funding, while enabling financial institution partners to tap into a fast-growing, high-quality small business segment in a cost-effective way. We integrate our direct sales team and network of channel partners, including the Ping An ecosystem, to acquire high quality borrowers. We operate a capital-light business model. As of June 30, 2020, we have credit risk exposure for only 2.8% of the outstanding balance of loans we facilitated. • In terms of the wealth management hub, as of June 30, 2020, we have connected with 429 institutional product providers, our spokes, to facilitate the offering of approximately 8,600 wealth management products to 12.8 million active investors. We leverage the Ping An ecosystem, our online marketing team and our member referral programs to source customers. We offer middle class and affluent customers tailored selections of investment products and one-click portfolios that are aligned with their risk appetite and investment objectives. As of June 30, 2020, approximately 75% of the client assets invested through our platform are from customers that invest more than RMB300,000 (US$42,462). Approximately 88% of these customers utilize one or more of the integrated account functions. These customers generally enjoy priority access to limited availability investments and dedicated services from online relationship managers to augment information for sophisticated products. • The integrated account serves as a single interface to connect all borrowers and investors to products, transactions, and services offered through the platform. Its real time processing allows us to continually develop, deepen, and retain customer relationships. Upon registering, new customers link an existing bank account to initiate investments and loans to be automatically funded and repaid through smart functionality. The integrated account allows customers to track all transactions, view performance, and automatically sweep balances into investments. Upon first purchase, AI verification tools deploy facial and voice recognition to confirm customer identification, undertake KYC processing, and screen for fraud, and subsequently leverage this data via voice bots to confirm customer understanding of risks when purchasing more sophisticated products. Through the integrated account, we provide a steady stream of recommendations, product alerts, and portfolio allocation analysis to help customers realize their long-term goals. Services such as our integrated account functions contributed to a 93.3% retention rate among wealth management customers in 2019. Retail Credit Facilitation Huge small business owner market with unmet needs. The unmet financing demand of small businesses in China was approximately RMB47 trillion (US$7 trillion) as of December 31, 2019. This market opportunity is huge because small business owners need larger ticket size loans and longer tenors for their personal or operating purposes, often on short notice, and they need both highly personalized services and a fast and convenient application process. Similarly, when salaried workers require larger loans for flexible use, they cannot fulfill their needs through traditional credit card and loan products either. Current players unable to meet more complex borrower needs. Traditional banks cannot serve small business owners and certain salaried worker customers effectively because they generally find it hard to provide larger ticket size loans without collateral. They may lack sophisticated data-driven risk assessment abilities and they generally do not possess developed technology for cost-efficient online capabilities. Similarly, online-only TechFin companies tend to focus on smaller size loans at shorter tenors where pricing for risk is less important, as they rely more on social behavior data rather than financial data for credit 3 Table of Contents decisioning given their lack of financial services background. Online-only TechFin companies and many traditional banks outsource their collection functions, which reduces their ability to manage risk in their portfolios, particularly at larger ticket sizes or at challenging points in the credit cycle. Unique data and financial DNA allow us to address these needs. Our unique combination of capabilities allows us to address the needs of small business owners and salaried workers: (1) Advanced risk models built on our over 15 years of proprietary credit data as well as analytics and insights derived from cooperation with other members of the Ping An ecosystem; (2) Cutting-edge data analytics and AI technologies to automate and digitize the entire loan facilitation process including AI-driven customer targeting, loan underwriting leveraging micro facial expression technologies, and smart robot-based customer service and collection processes; (3) Integrated offline-to-online distribution channels including a large nationwide direct salesforce of over 56,000 members, various channel partners, including the Ping An ecosystem, and online telemarketing; (4) An experienced and focused in-house collection team of more than 9,500 members; and (5) A long and consistent operating track record of close cooperation with more than 50 funding and credit enhancement partners. We target high quality borrowers with larger ticket sizes. Our target customers are high quality borrowers who have financial assets, real estate, or some access to commercial bank credit and yet are underserved by online-only TechFin companies and traditional financial institutions in China. Among the borrowers we served in the first six months of 2020, approximately 92% of them have credit cards and at least 57% of them own residential real estate, while 57% of them do not have unsecured bank loans outstanding. These customers typically need larger loans for operating or consumptions purposes. Larger ticket size loans generally offer greater economies of scale and more attractive customer lifetime value, which makes these customers an attractive segment for us. Medium to large ticket size loans generate approximately 77% of total pre-tax profit of the retail credit market. In the first six months of 2020, our average loan size was RMB146,513 (US$20,738) for general unsecured loans and RMB422,398 (US$59,787) for secured loans, compared to an estimated average ticket size of only approximately RMB5,000 (US$708) for the other top 5 lenders among non-traditional financial service providers, according to Oliver Wyman. Due to the high entry barriers surrounding the large ticket size, small business owner lending space, we enjoy market leadership, high profitability and limited direct competition. We have delivered stable through-the-cycle results. The balance of loans we facilitated grew at a CAGR of 26.6% from 2017 to 2019, while the DPD 30+ delinquency rate remained at less than 0.7% for secured loans we facilitated and less than 1.9% for general unsecured loans we facilitated as of December 31, 2017, 2018 and 2019, demonstrating the appeal of our target customer segments and our ability to effectively price for risk. DPD stands for days past due, and we define DPD 30+ delinquency rate as the outstanding balance of loans for which any payment is 30 to 179 calendar days past due divided by the outstanding balance of loans. See “— COVID-19 Impact” below for the impact of the pandemic on delinquency rates in the first six months of 2020. Wealth Management Large, fast growing wealth management market. Driven by the fast growth and high savings rate of the middle class and affluent population in China and their increasing demand for personalized investment and wealth management, the assets under management for the wealth management market reached RMB49 trillion (US$7 trillion) in 2019. The wealth management market is expected to grow to RMB118 trillion by the end of 2024, representing a CAGR of 19%. 4 Table of Contents Current players are not able to meet middle class and affluent investors’ needs. With the recent introduction of the New Asset Management Guidelines, the wealth management industry is moving from being product-centric to customer-centric, creating opportunities for technologyand data-driven personalized service offerings. However, the wealth management needs of the middle class and affluent are significantly underserved because these customers generally do not qualify for more comprehensive private banking services at traditional banks. They seek an increasingly sophisticated range of options but they may have difficulty selecting suitable solutions without assistance. Commercial banks offer limited products, mainly through higher-cost offline account managers who have limited wealth management expertise and lack specialized suitability management tools. Similarly, online-only TechFin companies seldom offer much beyond the most basic wealth management products with their focus to date mostly on smaller ticket cash management products linked to their ecommerce, social and payment platforms. We uniquely address sophisticated needs by tailoring through technology. With nearly 10 years of accumulated data and experience, we are able to provide a full suite of wealth management services tailored to address more sophisticated investor needs: (1) Comprehensive KYP and KYC data, leveraging underlying AI models, enables accurate facilitation of suitable products and portfolios to customers on a real-time basis with ongoing post investment monitoring; (2) Broad partnerships with 429 financial institutions, facilitating the offering of approximately 8,600 products across asset categories, support dynamic portfolio creation and performance-based product selection for changing market conditions; (3) Integrated offline-to-online marketing allows us to source and personalize services for high quality investors; (4) A robust integrated account with automated sweep, investment, and alert functions, supported by online relationship managers for high value customers, empowers investors to fulfill increasingly dynamic and sophisticated investment needs; and (5) Real-time recording of account verification data, customer risk tolerance information, product attribute disclosures, product purchasing clicks, and post-order risk comprehension verification calls on blockchain supports suitable selling regulatory requirements commensurate with more sophisticated products, with high efficiency. We target large, profitable segments. The middle class and affluent customer segments are increasingly seeking diversification of assets and services including dynamic adjustment of their portfolios to meet their goals. As of June 30, 2020, we served 44.7 million registered users and 12.8 million active investors, and 75.4% of our total client assets were contributed by higher value investors with client assets above RMB300,000 (US$42,462). As of June 30, 2020, our average wealth management client assets were approximately RMB29,330 (US$4,151), more than three times higher than the average client assets of the other top 5 non-traditional financial service providers which is estimated to average around RMB8,000 (US$1,132). Our target investors tend to demand sophisticated product offerings, representing additional revenue potential. These features make them an attractive target customer base. COVID-19 Impact The resilience and fundamental strengths of our business model have been further proven during COVID-19. Although the DPD 30+ delinquency rate for general unsecured loans increased from 1.8% as of December 31, 2019 to 3.3% as of June 30, 2020 and the DPD 30+ delinquency rate for secured loans increased from 0.6% to 1.4% as of the same dates, we swiftly resumed the operation of our business and flow rate, which is an early indicator for delinquency, began to improve. In response to nationwide lockdowns in China at the end of 5 Table of Contents January 2020, we made remote working arrangements for our collections staff, extended the usage of AI collection technology, and accelerated the launch of AI underwriting robots. As a result of these measures, we have seen recovery in early delinquency indicators in the second quarter of 2020, to levels around those that prevailed for most of 2019. The 1-to-89-day general unsecured loans flow rate improved to 0.6% in May, 0.5% in June and 0.5% in July after reaching a peak of 1.0% in February 2020 and the secured loans flow rate likewise improved to 0.2% in May, 0.2% in June and 0.1% in July after reaching a peak of 0.7% in February 2020. See “Business—Retail Credit Facilitation—Risk Management for Retail Credit— COVID-19 Impact” for the flow rate charts. Since we take limited credit risk under our capital-light business model, the increase in delinquencies had less impact on our financial results than those of our peers who bear higher credit risk than we do. Critical aspects of our business model have been reinforced during COVID-19. Although we source customers through offline-to-online channels, our ability to serve customers entirely online has allowed our businesses to benefit from changing consumer behaviors and, as a result, maintain growth in the initial COVID-19 lockdown period. In a bid to drive economic recovery, Chinese government policies have further emphasized the importance of small businesses in reigniting growth and employment. Our ability to serve small business owners in cooperation with financial institutions is squarely in line with policy priorities. Our success in controlling credit risks through the COVID-19 crisis is reinforcing long-standing relationships with our institutional funding partners. Capital market volatility accompanying COVID-19 is accelerating individual investor understanding of the need to invest in a more diversified manner, further underpinning the importance of our data-driven matching engines to guide investors to more sustainable investing. The new policy priorities, increased online customer behavior, and greater openness by traditional financial institutions to seek new forms of business collaboration resulting from the pandemic are, together, likely to reinforce our competitive advantages. Solid Performance and Growth Trajectory Our platform has demonstrated significant growth and profitability in the last three years. Over the three years from 2017 through 2019, our total balance of loans facilitated grew at a CAGR of 26.6%, while our total wealth management client assets, excluding legacy products, grew at a CAGR of 39.4%. Our total income increased from RMB27.8 billion to RMB47.8 billion (US$6.8 billion), representing a CAGR of 31.1%, and our net profit increased from RMB6.0 billion to RMB13.3 billion (US$1.9 billion), representing a CAGR of 48.6%, during the same period. We had total income of RMB25.7 billion (US$3.6 billion) and net profit of RMB7.3 billion (US$1.0 billion) for the first six months of 2020. As we have become increasingly capital-light, our income contribution from technology platform services grew from 61.9% in 2017 to 87.7% in 2019, while our net margin increased from 21.7% to 27.8% during the same period. For the first six months of 2020, our income contribution from technology platform services was 83.5% and our net margin was 28.3%. Our Strengths We believe that the following competitive strengths contribute to our success and differentiate us from our competitors: • Leading platform in a sizable and attractive market. We ranked number 2 in retail credit facilitation and number 3 in wealth management, in each case among non-traditional financial service providers in China as of June 30, 2020, according to Oliver Wyman. • Customer-centric product offerings and offline-to-online channels. Our purpose-built end-to-end technology platform integrates with offline-to-online capabilities, combining elegance, scalability and flexibility with deep customer relationships and effective risk management. • Technology-enabled customer experience and services. We integrate cutting-edge technologies with our product and service offerings to enable a seamless and personalized experience throughout the customer journey. 6 Table of Contents • Cutting-edge data-driven risk management. We embed advanced AI, big data, blockchain technology and analytics into business processes resulting in a highly sophisticated, holistic and adaptable risk management system. • Scalable capital-light business model. We have implemented a capital-light business model that has allowed us to grow rapidly with minimal constraints from capital demands and scale rapidly with lower costs. • Innovation and synergies within the Ping An ecosystem. We have benefited immensely from our relationship with Ping An Group while maintaining a high degree of self-sufficiency. • Experienced management team with proven track record of delivering growth and profitability. We have an experienced management team comprised of professionals from both financial institutions and technology market leaders, who bring abundant PRC local expertise and international experience to the table. Our Strategies We intend to continue to achieve our goals by pursuing the following strategies: Retail Credit Facilitation • Solidify our leadership in the small business owner personal lending space • Further refine our capital-light business model • Deepen data advantage and further leverage technology • Grow our consumer finance business Wealth Management • Lead the evolution of China’s asset management industry • Broaden customer outreach through hub-and-spoke partnerships with traditional financial institutions • Invest in core data and technology • Expand overseas Integrated Account • Enhance aggregation functionality • Broaden financial and life data scenarios and analytics Our Challenges Our ability to execute our strategies is subject to risks and uncertainties, including those relating to: • The rapid and significant evolution of our business and our industry in recent years; • General economic conditions, including any credit crisis or prolonged downturn in the credit markets; • Our ability to effectively manage risks related to the wealth management products displayed on our platform, including suitability-related risks; 7 Table of Contents • Our ability to perform due diligence, detect fraud and manage credit and other risks; • Our access to sufficient and sustainable funding at reasonable costs and on terms acceptable to us; • The laws and regulations we are subject to and the supervision of our businesses by national, provincial and local government authorities; • Any failure to obtain, renew or retain requisite approvals, licenses or permits applicable to our business; • Risks related to our legacy products and historical practices; • The total fees we charge for our retail credit facilitation and wealth management businesses; • The impact of the outbreak of COVID-19 on Chinese and global economic conditions; • Our relationships with third parties that are integral to the smooth operation of our business and platform; and • The influence that our principal shareholders have over our company and the possibility that their interests may not be aligned with the interests of our other shareholders. Please see “Risk Factors” and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face. Market Opportunities The retail credit market in China primarily consists of small business loans and individual consumer loans. In 2019, the outstanding balance of small business loans in China reached RMB43.1 trillion (US$6.1 trillion), representing a five-year CAGR of 14.3% between 2014 and 2019, and is expected to grow to RMB76.6 trillion in 2024, at a five-year CAGR of 12.2%, according to the Oliver Wyman Report. Small businesses serve as the backbone of the Chinese economy with significant contributions to China’s GDP, employment, tax revenues and innovation. The total demand for small business loans in 2019 was estimated to be RMB89.7 trillion (US$12.7 trillion), indicating that approximately 52% of demand (or RMB46.6 trillion) remained unserved. Such unserved demand is forecast to reach RMB50.0 trillion by 2024. The funding gap is primarily due to the enormous difficulties faced by small businesses, which typically do not have an established operating history or substantial assets to be used as collateral in obtaining sufficient credit at a reasonable cost. In addition, traditional financial institutions and large online-only TechFin companies are often less well equipped to meet small businesses’ specific needs for a streamlined online application process, face-to-face collateral evaluation consultations, large ticket size and longer-tenured operating loans, choices of both secured and unsecured loans and prompt response to urgent funding requests. In comparison, technology-enabled large fintech players with strong technology and data capabilities and effective offline-to-online models are presented with great opportunities in addressing this unserved market. China’s wealth management market has been growing rapidly, driven by the fast growth of the middle class and affluent population and their increasing demand for personalized investment. Total assets under management of the wealth management market reached RMB49.4 trillion (US$7.0 trillion) in 2019 and are expected to grow to RMB118.0 trillion by the end of 2024, representing a five-year CAGR of 19%. In particular, wealth management players who can leverage advanced technology, offer efficient processing time and maintain low distribution costs are experiencing significant growth. The online non-traditional financial service provider wealth management market had assets under management of RMB7.6 trillion (US$1.1 trillion) in 2019, which is expected to grow at a five-year CAGR of 29% to reach RMB27.5 trillion by the end of 2024, and the online penetration rate of wealth management services in China by total assets under management was 29% in 2019, compared with 43% in the U.S., and is expected to reach 42% in 2024. 8 Table of Contents There have been significant changes in products offered by the wealth management industry in response to China’s new asset management regulations, giving rise to greater specialization between asset managers and distribution channels, and accelerating the transition from guaranteed and short-term products to net asset value-based and long-term products. As a result, the market has seen a heightened focus on suitability for wealth management products, the rising demand for portfolio diversification and increasing emphasis placed on technology-empowered capabilities. Successful players must have advanced data and technologies to provide individualized investment recommendations and seamless investing experiences, and a strong brand and established operating history to build credibility, and they must comply with licensing and other regulatory requirements. Recent Developments We have achieved solid business growth in our core business during the third quarter of 2020. As of September 30, 2020, our total balance of retail credit facilitated reached RMB535.8 billion (US$75.8 billion), compared to RMB519.4 billion as of June 30, 2020 and RMB441.2 billion as of September 30, 2019. As of September 30, 2020, the total client assets generated through our online wealth management platform reached RMB378.3 billion (US$53.5 billion), compared to RMB374.7 billion as of June 30, 2020 and RMB350.9 billion as of September 30, 2019. The APR of all new loans applied for after September 4, 2020 was below 24%, which is equivalent to below 13.7% in annualized nominal borrowing cost. We facilitated RMB54.8 billion (US$7.8 billion) of new loans in September 2020, representing a year-on-year increase of 20.1% over the same month in 2019. The corresponding numbers for the previous two months in the same quarter before the change in APR were RMB49.7 billion in July 2020 and RMB43.3 billion in August 2020. However, we have only begun to operate under the reduced APR and we cannot assure you that our performance in September 2020 is indicative of future trends. Our credit performance has largely recovered from the COVID-19 impact, as our DPD 30+ delinquency rate decreased to 2.5% for general unsecured loans and 0.9% for secured loans as of September 30, 2020. The 1-to-89-day general unsecured loans flow rate was stable at 0.5% in July, August, and September. See “Business—Retail Credit Facilitation—Risk Management for Retail Credit—COVID-19 Impact” for flow rate charts. On September 30, 2020, we issued automatically convertible promissory notes and optionally convertible promissory notes in a total principal amount of US$1,361,925,000 to certain holders of our Class C ordinary shares, in exchange for a total of 45,287,111 Class C ordinary shares held by them. The automatically convertible promissory notes will be converted into ordinary shares automatically upon the closing of this offering. The optionally convertible promissory notes can be converted into an aggregate of 38,493,660 ordinary shares, without giving effect to any anti-dilutive adjustments, during the period between the completion of this offering and September 30, 2023. We pay 6% annual interest to the holders of both kinds of notes until the notes are fully repaid or converted. See “Description of Share Capital—History of Securities Issuances—C-Round Restructuring Convertible Notes.” The primary purpose of this transaction was to secure the support of our Class C shareholders for capital markets offerings under dynamic market conditions. We offered the notes to all of the holders of Class C ordinary shares, and all but one of them accepted and agreed to an extended lock-up period following this offering that is longer than the customary 6-month lock-up period. As part of the transaction, holders of the automatically convertible promissory notes have agreed to lock-up restrictions for 6 months for half of the ordinary shares issuable upon conversion of their notes and 12 months for the other half, and holders of the optionally convertible promissory notes have agreed to lock-up restrictions for 12 months for the ordinary shares issuable upon conversion of their notes, in each case, from the date of this prospectus and subject to certain exceptions. See “Underwriting.” As a result of this transaction, we expect to record an one-time loss in the quarter ended September 30, 2020 of approximately US$200 million due to the higher aggregate fair 9 Table of Contents value of the C-Round Restructuring Convertible Notes compared to the Class C ordinary shares. This transaction does not have a significant dilutive impact. Corporate History and Structure The history of our retail credit facilitation business dates back to August 2005, when Ping An Group launched a consumer loan business in Shenzhen, China. The history of our wealth management business dates back to September 2011, when Ping An Group established its wealth management subsidiary in Shanghai. In 2014, we underwent a series of reorganizations to further the strategic development of our business and incorporated our company in the Cayman Islands in December 2014 as a holding company. In May 2016, we acquired our retail credit facilitation business from Ping An Group. We currently carry out our wealth management business primarily through Weikun (Shanghai) Technology Service Co., Ltd., Lufax Holding (Shenzhen) Technology Service Co., Ltd. and our consolidated affiliated entities, including Shanghai Lujiazui International Financial Asset Exchange Co., Ltd., or Shanghai Lufax. Since 2017, we have also expanded internationally with operations in Singapore and Hong Kong. We conduct our retail credit facilitation business primarily through Ping An Puhui Enterprises Management Co., Ltd. and its subsidiaries as well as Ping An Puhui Financing Guarantee Co., Ltd. and Chongqing Jin An Microloan Limited. These entities are collectively known as Puhui. Shenzhen Ping An Puhui Microloan Co., Ltd., Hunan Ping An Puhui Microloan Co., Ltd. and Chongqing Jin An Microloan Limited have received regulatory approvals to provide microloan services. Ping An Puhui Financing Guarantee Co., Ltd. and Ping An Financing Guarantee (Tianjin) Co., Ltd. hold licenses for providing financing guarantee services. Ping An Consumer Finance Co., Ltd. is licensed to provide consumer finance services. We intend to acquire majority interest in an affiliated company that is licensed to distribute wealth management products such as asset management plans, mutual funds and private investment funds in China. We have cooperated with this entity by facilitating its distribution of fund products on our wealth management platform. The transaction will be subject to regulatory approvals and customary closing conditions. The income and assets of the target company are not material compared to our total income and assets. 10 Table of Contents The following diagram illustrates our corporate structure as of the date of this prospectus, including our principal subsidiaries and our principal consolidated affiliated entities: Notes: (1) Shenzhen Ping An Financial Technology Consulting Co., Ltd, Xinjiang Tongjun Equity Investment Limited Partnership, Shanghai Lanbang Investment Limited Liability Company and Linzhi Jinsheng Investment Management Limited Partnership each holds 49.99%, 29.55%, 18.29% and 2.17% of the equity interests, respectively, in Shanghai Xiongguo Corporation Management Co., Ltd. and Shenzhen Lufax Holding Enterprise Management Co., Ltd. (2) Shanghai Xiongguo Corporation Management Co., Ltd. and Shanghai Huikang Information Technology Co., Ltd. each holds 99.995% and 0.005% of the equity interests in Shanghai Lujiazui International Financial Asset Exchange Co., Ltd. (3) Harmonious Splendor Limited and Ping An Puhui Enterprises Management Co., Ltd. each holds 90.625% and 9.375% of the equity interests in Chongqing Jin An Microloan Limited. (4) Ping An Insurance (Group) Company of China, Ltd., Harmonious Splendor Limited, Weikun (Shanghai) Technology Service Co., Ltd., Jinjiong (Shenzhen) Technology Service Limited each holds 30%, 28%, 27% and 15% of the equity interests in Ping An Consumer Finance Co., Ltd., respectively. Corporate Information Our principal executive offices are located at No. 1333 Lujiazui Ring Road 15/F, Shanghai, People’s Republic of China. Our telephone number at this address is +86 21-38632121. Our registered office in the Cayman Islands is located at Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168. 11 Table of Contents Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Conventions Which Apply to this Prospectus Except where the context otherwise requires and for purposes of this prospectus only: • “active investors” refer to investors who have made at least one investment through our wealth management platform or have had client assets with us above zero in the past twelve months; • “ADSs” refer to our American depositary shares, with every two ADSs representing one ordinary share; • “AI” refers to artificial intelligence; • “APR” or “annualized percent rate” refers to the monthly all-in borrowing cost as a percentage of the outstanding balance annualized by a factor of 12, where all-in borrowing cost comprises the actual amount of (a) interest, (b) insurance premiums or guarantee fees and (c) retail credit facilitation service fees; • “China” or the “PRC” refers to the People’s Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan; • “client assets” refer to the outstanding balance of client assets generated through our platforms, where an asset is counted towards the outstanding balance for so long as it continues to be held by the investor who acquired it through our platform; • “cumulative borrowers” refer to the cumulative number of borrowers who had submitted their loan application request and successfully made drawdowns since our inception; • “IFRS” refers to International Financial Reporting Standards as issued by the International Accounting Standards Board; • “legacy products” mainly include a category of unsecured revolving credit lines in our retail credit facilitation business and peer-to-peer products and certain types of structured alternative products originated by financial institutions for individual investors, which we refer to as business-to-consumer or B2C products, in our wealth management business; • “Lufax,” “we,” “us,” “our company” and “our” refer to Lufax Holding Ltd, a Cayman Islands exempted company, and its subsidiaries and, in the context of describing our operations and consolidated financial information, also include our consolidated affiliated entities and its subsidiaries; • “non-traditional financial service providers” refers to fintech companies, online-only TechFin companies and online lending platforms; • “Oliver Wyman Report” refers to a report commissioned by us and prepared by Oliver Wyman, an independent industry research firm, to provide information on the retail credit and wealth management industries in China; • “ordinary shares” refer to our ordinary shares of par value US$0.00001 per share; • “outstanding balance of loans facilitated” refers to the total principal amount outstanding at the end of the given period for loans we facilitated; • “Ping An ecosystem” refers to Ping An Group and its subsidiaries, affiliates and associates, including but not limited to OneConnect Financial Technology Co., Ltd. (NYSE: OCFT), or OneConnect; • “Ping An Group” refers to Ping An Insurance and its subsidiaries; • “Ping An Insurance” refers to Ping An Insurance (Group) Company of China, Ltd.; 12 Table of Contents • “Ping An P&C” refers to Ping An Property & Casualty Insurance Company of China, Ltd.; • “registered users” refer to individuals who have registered on our platform using their mobile phone number, without regard to whether they subsequently engage in any transactions on our platform; • “RMB” and “Renminbi” refer to the legal currency of China; and • “volume of new loans facilitated” refers to the principal amount of new loans we facilitated during the given period. Our reporting currency is the Renminbi. This prospectus also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB7.0651 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2020. We make no representation that the Renminbi or U.S. dollars amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On October 23, 2020, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board was RMB6.6861 to US$1.00. This prospectus contains information derived from various public sources and certain information from an industry report in July 2020 commissioned by us and prepared by Oliver Wyman, an independent industry research firm, to provide information regarding our industry and market position. Such information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in this report. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the “Risk Factors” section. These and other factors could cause results to differ materially from those expressed in this report. Due to rounding, numbers presented throughout this prospectus may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. 13 Table of Contents THE OFFERING The following assumes that the underwriters will not exercise their option to purchase additional ADSs in the offering, unless otherwise indicated. Offering Price US$13.50 per ADS. ADSs Offered by us 175,000,000 ADSs (or 201,250,000 ADSs if the underwriters exercise their over-allotment option in full). ADSs Outstanding Immediately After This Offering 175,000,000 ADSs (or 201,250,000 ADSs if the underwriters exercise their option to purchase additional ADSs in full). Ordinary Shares Outstanding Immediately After This Offering 1,219,072,996 ordinary shares (or 1,232,197,996 ordinary shares if the underwriters exercise their option to purchase additional ADSs in full), taking into account the conversion of all outstanding Automatically Convertible Notes upon the closing of this offering at the initial offering price of US$13.50 per ADS (or US$27.00 per ordinary share), but excluding any ordinary shares that may be issued upon the conversion of any outstanding Optionally Convertible Notes as described in “Description of Share Capital—History of Securities Issuances.” NYSE symbol LU The ADSs Two ADSs represent one ordinary share. The ADSs may be evidenced by ADRs. The depositary will hold the ordinary shares underlying your ADSs and you will have rights as provided in the deposit agreement among us, the depositary and all holders and beneficial owners of ADSs issued thereunder. We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares, after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement. You may surrender your ADSs to the depositary in exchange for our ordinary shares. The depositary will charge you fees for any exchange. We and the depositary may amend or terminate the deposit agreement without your consent. If an amendment becomes effective and you continue to hold your ADSs, you agree to be bound by the deposit agreement as amended. To better understand the terms of the ADSs, you should carefully read the “Description of American Depositary Shares” section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. 14 Table of Contents Option to purchase additional ADSs We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an additional 26,250,000 ADSs. Use of Proceeds We estimate that we will receive net proceeds of approximately US$2,265 million from this offering (or US$2,606 million if the underwriters exercise their option to purchase additional ADSs in full), after deducting the underwriting discounts, commissions and estimated offering expenses payable by us. We plan to use the net proceeds of this offering primarily for general corporate purposes, which may include investment in product development, sales and marketing activities, technology infrastructure, capital expenditures, global expansions and other general and administrative matters. We may also use a portion of these proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments. See “Use of Proceeds” for additional information. Lock-up We, our directors and executive officers, and all of our existing shareholders have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ADSs, ordinary shares or similar securities for a period of 180 days from the date of this prospectus. In addition, certain of our principal shareholders have agreed to be subject to additional lock-up restrictions for a period of 12 months from the date of this prospectus, with respect to all or a portion of their ADSs, ordinary shares or similar securities. Furthermore, holders of the Automatically Convertible Notes and Optionally Convertible Notes have agreed to be subject to similar lock-up restrictions for a period of at least six months from the date of this prospectus. See “Underwriting” for more information. Risk Factors See “Risk Factors” and other information included in this prospectus for a discussion of the risks you should carefully consider before investing in the ADSs. Depositary Citibank, N.A. The number of ordinary shares that will be outstanding immediately after this offering: • is based upon 1,124,006,331 ordinary shares outstanding as of the date of this prospectus, assuming (1) all issued and outstanding Class B ordinary shares and Class C ordinary shares shall be automatically converted into Class A ordinary shares on a one-for-one basis immediately prior to this offering and (2) the re-designation and re-classification of all the then issued and outstanding Class A ordinary shares and the remaining authorized and unissued Class A ordinary shares into ordinary shares on a one-for-one basis immediately prior to this offering; 15 Table of Contents • assumes no exercise of the underwriters’ option to purchase additional ADSs representing ordinary shares; • assumes the conversion of all outstanding Automatically Convertible Notes upon the closing of this offering at the initial offering price of US$13.50 per ADS (or US$27.00 per ordinary share), but excluding any ordinary shares that may be issued upon the conversion of any outstanding Optionally Convertible Notes as described in “Description of Share Capital—History of Securities Issuances”; • excludes 5,153,936 ordinary shares issuable upon the exercise of options outstanding as of the date of this prospectus under our 2015 Plan; and • excludes ordinary shares reserved for future issuances under our 2015 Plan. 16 Table of Contents SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA The following summary consolidated statements of operations and comprehensive income data for the years ended December 31, 2017, 2018 and 2019, summary consolidated balance sheet data as of December 31, 2017, 2018 and 2019 and summary consolidated cash flow data for the years ended December 31, 2017, 2018 and 2019 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated statements of operations and comprehensive income data for the six months ended June 30, 2019 and 2020, summary consolidated balance sheet data as of June 30, 2020 and summary consolidated cash flow data for the six months ended June 30, 2019 and 2020 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. You should read this Summary Consolidated Financial and Operating Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with IFRS. Our historical results are not necessarily indicative of results expected for future periods. The following table shows our summary consolidated statements of operations and comprehensive income data for the years ended December 31, 2017, 2018 and 2019 and for the six months ended June 30, 2019 and 2020. 2017 RMB Technology platform–based income: Retail credit facilitation service fees Wealth management transaction and service fees Total technology platform–based income Net interest income Guarantee income Other income Investment income Share of net profits of investments accounted for using the equity method Total income Sales and marketing expenses General and administrative expenses Operation and servicing expenses Technology and analytics expenses Credit impairment losses Asset impairment losses Finance costs Other gains/(losses) – net Total expenses Profit before income tax Less: Income tax expenses Net profit For the Year Ended December 31, For the Six Months Ended June 30, 2018 2019 2019 2020 Actual Pro forma(1) Actual Pro forma(1) RMB RMB US$ RMB US$ RMB RMB US$ RMB US$ (in millions except per share data) 15,336 29,576 39,325 5,566 39,325 5,566 19,015 20,754 2,938 20,754 2,938 1,885 17,221 7,256 1,456 810 1,060 2,645 32,221 5,894 814 508 1,017 2,604 41,929 3,909 465 879 579 369 5,935 553 66 124 82 2,604 41,929 3,909 465 879 579 369 5,935 553 66 124 82 1,492 20,507 2,172 314 329 100 699 21,453 2,998 170 656 447 99 3,036 424 24 93 63 699 21,453 2,998 170 656 447 99 3,036 424 24 93 63 16 27,819 (7,451) (2,823) (3,072) (1,302) — (3,736) (1,297) 225 (19,455) 8,364 (2,337) 6,027 46 40,500 (10,767) (2,796) (4,367) (1,659) (935) (7) (900) (420) (21,850) 18,649 (5,073) 13,576 73 47,834 (14,931) (2,853) (5,471) (1,952) (1,863) (135) (1,520) 325 (28,400) 19,434 (6,117) 13,317 10 6,770 (2,113) (404) (774) (276) (264) (19) (215) 46 (4,020) 2,751 (866) 1,885 73 47,834 (14,931) (2,853) (5,471) (1,952) (1,863) (135) (2,738) 325 (29,618) 18,215 (6,117) 12,099 10 6,770 (2,113) (404) (774) (276) (264) (19) (388) 46 (4,192) 2,578 (866) 1,712 25 23,446 (7,108) (1,519) (2,497) (864) (470) 0 (830) 190 (13,099) 10,347 (2,869) 7,478 (41) 25,684 (8,620) (1,348) (2,819) (849) (1,099) — (887) 46 (15,576) 10,108 (2,836) 7,272 (6) 3,635 (1,220) (191) (399) (120) (156) — (126) 6 (2,205) 1,431 (401) 1,029 (41) 25,684 (8,620) (1,348) (2,819) (849) (1,099) — (826) 46 (15,514) 10,169 (2,836) 7,333 (6) 3,635 (1,220) (191) (399) (120) (156) — (117) 6 (2,196) 1,439 (401) 1,038 17 Table of Contents (1) The consolidated statements of comprehensive income for the year ended December 31, 2019 and six months ended June 30, 2020 are presented on a pro forma basis to reflect (i) the issuance of Optionally Convertible Notes and Automatically Convertible Notes in exchange for Class C ordinary shares assuming all the terms and circumstances as of September 30, 2020, as well as the conversion of all outstanding Automatically Convertible Notes into 7,566,665 ordinary shares as described in “Description of Share Capital—History of Securities Issuances”; (ii) the automatic conversion of all of our outstanding Class B ordinary shares and Class C ordinary shares into Class A ordinary shares immediately prior to this offering on a one-for-one basis; and (iii) the re-designation and re-classification of all the then issued and outstanding Class A ordinary shares and the remaining authorized and unissued Class A ordinary shares into ordinary shares immediately prior to this offering on a one-for-one basis. The following table shows summary consolidated balance sheet data as of December 31, 2017, 2018 and 2019 and as of June 30, 2020. 2017 ASSETS Cash at bank Restricted cash Financial assets at fair value through profit or loss Financial assets at amortized cost Accounts and other receivables and contract assets Loans to customers Total assets LIABILITIES Payable to platform investors Payable to investors of consolidated structured entities Accounts and other payables and contract liabilities Convertible redeemable preferred shares Optionally convertible promissory note Total liabilities Share premium Retained earnings Other reserves Total equity (1) As of December 31 2018 2019 As of June 30, 2020 Actual Pro forma(1) US$ RMB US$ RMB US$ (in millions) RMB RMB RMB 18,713 6,558 12,442 — 18,467 97,553 180,358 18,576 7,937 16,444 3,108 20,095 34,428 117,919 7,352 24,603 18,583 8,623 26,296 47,499 149,534 1,041 3,482 2,630 1,221 3,722 6,723 21,165 15,509 21,758 22,724 7,250 26,524 80,907 192,138 2,195 3,080 3,216 1,026 3,754 11,452 27,195 14,546 21,758 22,724 7,250 26,524 80,907 191,175 2,059 3,080 3,216 1,026 3,754 11,452 27,059 10,212 114,728 3,756 — — 159,122 10,870 2,677 7,120 21,236 9,820 31,810 6,244 8,935 — 82,971 14,113 16,237 4,579 34,948 15,344 47,243 4,826 10,259 — 101,388 14,113 29,346 4,582 48,145 2,172 6,687 683 1,452 — 14,351 1,998 4,154 649 6,815 12,668 79,689 4,983 10,754 — 135,240 14,113 36,629 4,498 56,898 1,793 11,279 705 1,522 — 19,142 1,998 5,185 637 8,053 12,668 79,689 4,983 — 8,052 132,645 15,907 35,083 5,884 58,531 1,793 11,279 705 — 1,140 18,775 2,251 4,966 833 8,284 The selected consolidated balance sheet as of June 30, 2020 are presented on a pro forma basis to reflect (i) the issuance of Optionally Convertible Notes and Automatically Convertible Notes in exchange for Class C ordinary shares assuming all terms and circumstances as of September 30, 2020, as well as the conversion of all outstanding Automatically Convertible Notes into 7,566,665 ordinary shares as described in “Description of Share Capital—History of Securities Issuances”; (ii) the automatic conversion of all of our outstanding Class B ordinary shares and Class C ordinary shares into Class A ordinary shares immediately prior to this offering on a one-for-one basis; and (iii) the re-designation and re-classification of all the then issued and outstanding Class A ordinary shares and the remaining authorized and unissued Class A ordinary shares into ordinary shares immediately prior to this offering on a one-for-one basis. 18 Table of Contents The following table shows our summary consolidated cash flow data for the years ended December 31, 2017, 2018 and 2019 and for the six months ended June 30, 2019 and 2020: For the Year Ended December 31, 2017 2018 2019 RMB RMB RMB US$ (in millions) Summary Consolidated Cash Flows Data: Net cash generated from/(used in) in operating activities Net cash (used in)/generated from investing activities Net cash generated from/(used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 2,675 (1,630) 6,505 (47) 7,503 11,125 18,628 (1,452) 3,494 (2,008) (86) (52) 18,628 18,576 2,192 (11,014) (2,612) 170 (11,264) 18,576 7,312 310 (1,559) (370) 24 (1,594) 2,629 1,035 For the Six Months Ended June 30, 2019 2020 RMB RMB US$ 1,949 1,706 (4,196) 2 (539) 18,576 18,038 4,476 (369) 3,744 (9) 7,842 7,312 15,154 634 (52) 530 (1) 1,110 1,035 2,145 The following table shows certain of our operating data as of the dates and for the periods indicated: As of and For the Years Ended December 31, 2017 2018 2019 Retail Credit Facilitation Number of cumulative borrowers (millions) Outstanding balance of loans facilitated (RMB billions) Percentage without credit risk exposure Percentage with credit risk exposure Volume of new loans facilitated (RMB billions) Percentage funded by third parties Percentage funded by us Wealth Management Number of registered users (millions) Number of active investors (millions) Total client assets (RMB billions) Current products Legacy products 19 As of and For the Six Months Ended June 30, 2020 7.5 288.4 75.4% 24.6% 343.8 51.8% 48.2% 10.3 375.0 94.7% 5.3% 397.0 96.8% 3.2% 12.4 462.2 97.8% 2.2% 493.7 99.8% 0.2% 13.4 519.4 97.2% 2.8% 284.5 99.3% 0.7% 33.8 9.6 461.7 27.1% 72.9% 40.4 11.2 369.4 49.4% 50.6% 44.0 12.5 346.9 70.2% 29.8% 44.7 12.8 374.7 87.2% 12.8% Table of Contents RISK FACTORS Risks Relating to Our Business Our industry is rapidly changing, and our business has evolved significantly in recent years, which makes it difficult to evaluate our future prospects. We operate in China’s retail credit and wealth management industries, which are rapidly changing and may not develop as we anticipate. There are few established players and no proven business model in these new and fast growing industries. The regulatory frameworks governing the retail credit and wealth management industries continue to develop rapidly but are expected to remain uncertain for the foreseeable future. In addition, our business and business model have evolved significantly in recent years. As these industries and our business continue to develop, we may further modify our business model or our platform, services and solutions. These modifications may not achieve expected results and may have a material and adverse impact on our financial condition and results of operations. You should consider our business and future prospects in light of the risks and challenges we may encounter in these rapidly changing industries, including, among other things, our ability to: • attract, retain and develop active users for our platform and apps; • navigate a complex and evolving regulatory environment; • continue to develop, maintain and scale our platform and sustain our historical growth rates; • convince prospective customers, users and partners of the value of products and services on our platform; • increase our market share and offer personalized and competitive services; • offer or maintain attractive fees while driving the growth and profitability of our business; • develop sufficient, diversified, sustainable, cost-efficient and reputable institutional funding sources; • continue to develop and improve the effectiveness, accuracy and efficiency of our proprietary credit assessment and risk management technology; • improve our operational efficiency and maintain profitability; • enhance our technology infrastructure to support the growth of our business, maintain the security of our system and the confidentiality of the information provided and utilized across our system; • effectively maintain, upgrade and scale our financial and risk management controls and procedures; • defend ourselves against legal proceedings and regulatory actions, such as claims against us relating to our sales and collection efforts, fee structures, employee and third-party misconduct, intellectual property, cybersecurity or privacy; • operate without being adversely affected by negative publicity about our industry in general and our company in particular, including baseless or ill-intentioned negative publicity; and • navigate fluctuations in economic conditions. If we fail to address any or all of these risks and challenges, our business may be materially and adversely affected. A credit crisis or a prolonged downturn in the credit markets may materially and adversely impact our reputation, business, results of operations and financial position. Our business is subject to credit cycles associated with the volatility of the general economy. In particular, the operations of our retail credit facilitation and wealth management businesses may be severely affected in a 20 Table of Contents credit crisis or prolong downturn in the credit markets. For example, we may face increased risk of default or delinquency of borrowers, which will result in lower returns or losses for our funding partners, credit enhancement partners and us. In the event that the creditworthiness of our borrowers deteriorates or we cannot accurately track the deterioration of their creditworthiness, the criteria we use for the analysis of borrower credit profiles may be rendered inaccurate, and our risk management system may be rendered ineffective. This in turn may lead to higher default rates and an adverse impact on our reputation, business, results of operations and financial position as well as our ability to retain existing or attract new funding and credit enhancement partners. Moreover, the performance of the underlying assets of the wealth management products available on our platform maybe materially and adversely affected when during a prolonged downturn in the credit markets. If our platform investors suffer from losses in their investments as a result, existing or potential investors may be discouraged from using our services and our reputation may be harmed. In addition, a credit crisis or prolonged downturn in the credit markets might cause tightening in credit guidelines, limited liquidity, deterioration in credit performance and increased foreclosure activities. Since we predominantly generate our income from fees charged for services, a decrease in loans facilitated and total client assets invested could cause a material decline in our income for the duration of a crisis or downturn. In addition, we and our business partners may increase fees, including guarantee fees, when they perceive heightened credit risks, which may have a material and adverse impact on our profitability. Moreover, a financial and credit crisis may be coupled with or trigger a downturn in the macroeconomic environment, which could cause a general decrease in lending and investment activities over a prolonged period of time and materially and adversely impact the industries we operate in. If a credit crisis or prolonged downturn were to occur, particularly in China’s credit markets, our business, financial performance and prospects may be materially and adversely affected. Furthermore, a credit crisis may lead to fluctuations in interest rates. If the prevailing market interest rates rise while borrowers on our platform are unwilling to accept a corresponding increase in interest rates, funding partners may be deterred from providing funding through our platform. If our borrowers decide not to utilize our credit products because of increases in interest rates, our ability to retain existing borrowers, attract or engage prospective borrowers as well as our competitive position may be severely limited. We cannot assure you that we will be able to effectively manage such interest risk at all times or pass on any increase in interest rates to our borrowers. If we are unable to effectively manage such an increase, our business, profitability, results of operations and financial condition could be materially and adversely affected. If the prevailing market interest rates decrease and we fail to adjust the interest rates for borrowers on our platform, prospective borrowers may choose to borrow from other platforms to take advantage of the lower funding cost offered by them. As a result, any fluctuation in the overall interest rate environment may discourage borrowers from making credit applications from us or utilize their approved credit, which may adversely affect our business. The total fees we charge for our retail credit facilitation service may be deemed to be in excess of interest rate limits imposed by laws or regulatory bodies. As a result, part of the interests and fees may not be valid or enforceable through the PRC judicial system. Our retail credit facilitation service and other fees, to the extent they are deemed to be or related to loan interest, are subject to the restrictions on interest rates as specified in applicable rules on private lending. The Notice on the Regulation and Rectification of the “Cash Loan” Business, or Circular 141, requires online platforms, microloan companies and other entities to charge synthetic fund costs, including the interest and fees paid by the borrowers, in compliance with the rules provided by the Supreme People’s Court, and such costs shall be within the legally allowed annualized interest rate for private lending. According to the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases promulgated on September 1, 2015, in the event the sum of the annualized interest that lenders charge and the fees we and our business partners charge exceeded the 24% limit, and borrowers refused to pay the portion that exceeds the 24% limit, PRC courts would not uphold our request to demand the portion of the fees that exceeds the 24% limit from such borrowers. If the sum of the annual interest that lenders charge and the fees we and our business partners charge exceeds 36%, the portion that exceeds the 36% limit is invalid. The Supreme 21 Table of Contents People’s Court issued the Several Opinions on Further Strengthening the Judicial Work in the Finance Sector in August 2017, which provides that in the context of peer-to-peer lending, if an online lending information intermediary and a lender intentionally collude to evade the interest rate ceiling as set out by the law through disguising loan interest as loan facilitation service fees, then such arrangements shall be declared invalid. On July 22, 2020, the Supreme People’s Court and the National Development and Reform Commission, or the NDRC, jointly released the Opinions on Providing Judicial Services and Safeguards for Accelerating the Improvement of the Socialist Market Economic System for the New Era, or the Opinions. The Opinions set out that if the interest and fees, including interest, compound interest, penalty interest, liquidated damages and other fees, claimed by one party to the loan contract exceed the upper limit under judicial protection, the claim will not be supported by the court, and if the parties to the loan disguise the financing cost in an attempt to circumvent the upper limit, the rights and obligations of all parties to the loan will be determined by the actual loan relationship. On August 20, 2020, the Supreme People’s Court issued the Decision on Amending the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases, or the Judicial Interpretation Amendment, which amended the upper limit of private lending interest rates under judicial protection. According to the Judicial Interpretation Amendment, if the service fees or other fees that we charge are deemed to be loan interest or fees related to loans (inclusive of any default rate and default penalty and any other fee), in the event the sum of the annualized interest that lenders charge and fees we and our business partners charge exceed four times of the one-year Loan Prime Rate at the time of the establishment of the agreement, or the Quadruple LPR Limit, borrowers may refuse to pay the portion that exceeds the Quadruple LPR Limit. In that case, PRC courts will not uphold our request to demand the payment of fees that exceed the Quadruple LPR Limit from such borrowers. If borrowers have paid the fees that exceed the Quadruple LPR Limit, such borrowers may request us to refund the portion exceeding the Quadruple LPR Limit and the PRC courts may uphold such requests. The aforementioned one-year Loan Prime Rate refers to the one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center on the 20th of each month starting from August 20, 2019, and the one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center on September 21, 2020 was 3.85%. We cannot assure you that the one-year loan market quoted interest rate and the Quadruple Limit will not decrease further in the future. There remain uncertainties in the interpretation and implementation of the Judicial Interpretation Amendment, including its applicability to licensed financial institutions, the basis of calculation formula used to determine the interest limit, the scope of inclusion of related fees and insurance premiums, as well as inconsistencies between the standard and level of enforcement by different PRC courts. We cannot assure you that there will not be any changes to the detailed calculation formula used to determine the interest limit, our future fee rates will not be lowered as a result of the Quadruple LPR Limit, or that the Quadruple LPR Limit will not be applied to our historical and legacy products where the related dispute cases are accepted by PRC courts of first instance on or after August 20, 2020. In such cases, we and our business partners may be required to repay certain borrowers if our historical and legacy loan products are deemed to have violated the applicable laws and regulations concerning the limit of lending interest and fee rates. Our business, results of operations and financial condition may therefore be materially and adversely affected by the implementation of the Judicial Interpretation Amendment. In addition to rules, opinions and decisions issued by the PRC courts, we and our business partners are also subject to regulatory agencies’ requirements, supervision or guidance. We have lowered the APR on loans we facilitate since early September 2020 and may further lower the APR from time to time as a result of changes in regulation or our business strategy. We may also reduce our outstanding loan volumes, significantly modify our fee rate structure within a prescribed period of time or modify our business cooperation model with third-party business partners, including our credit enhancement partners. If we are unable to comply with such regulatory requirements, supervision or guidance or are deemed to be charging above the maximum interest rates permitted by the relevant laws, regulations, policies or guidance, we could be subject to orders of suspension, cessation or rectification, cancellation of qualifications, or other penalties, and our business, financial condition, results of operations and our cooperation with business partners could be materially and adversely affected as a result. See also “—Our business is subject to laws, regulation, and supervision by national, provincial and local government 22 Table of Contents and judicial authorities, industry associations and other regulatory bodies. The laws, regulations and official guidance relating to our business are complex, evolving rapidly and may be subject to further changes. Non-compliance with any existing or new regulation may result in penalties, limitations and prohibitions on our business activities, and we have been modifying and may need to continue to modify our business operations in response to changes in laws and regulations.” The wealth management products displayed on our platform involve various risks, and failure to identify or fully appreciate such risks will negatively affect our reputation, client relationships, operations and prospects. We display a broad variety of wealth management products on our platform, including asset management plans, bank products, mutual funds, private investment funds and trust products, among others. These products often have complex structures and involve various risks, including default risk, interest rate risk, liquidity risk and other risks. In addition, third parties we collaborate with might be confronted with liquidity risks, which may expose our platform investors to the liquidity risks in the products we display on our platform. Moreover, the wealth management products available on our platform are also subject to systematic risk and market volatility, which may reduce the value of the investments of our platform investors regardless of the performance or profitability of the businesses underlying such investment products. Neither the principal nor the return of the wealth management products available on our platform is guaranteed by us. As such, we generally do not bear any liabilities for any loss to capital invested in the products. However, despite product risk warnings and platform disclaimers, our platform investors may attempt to hold us responsible for their losses, which could harm our reputation and result in reduced traffic to our platform. Furthermore, we may also face pressure from regulatory authorities to share losses incurred by our platform investors in order to maintain social harmony and financial market stability, which can have a material and adverse impact on our business, results of operations and financial condition. In addition, although we have implemented strict suitability management and transparent disclosure policies, such policies and procedures may not be fully effective in mitigating suitability-related risks in all scenarios. If we or our customer service personnel are found to have engaged in suitability-related misconduct, we may be held responsible when our platform investors incur losses, and our reputation, client relationships, business and prospects will be materially and adversely affected. For more details on risks relating to our product risk management, see “—Information regarding individuals to whom we provide our financial services may not be complete, and our ability to perform due diligence, detect borrower fraud or manage our risks may be compromised as a result.” Our access to sufficient and sustainable funding at reasonable costs cannot be assured. The growth and success of our future operations depend on the availability of adequate lending capital to meet borrowers’ demands for loans on our platform. To maintain sufficient and sustainable funding to meet borrower demands, we need to keep expanding the funding base and securing a stable stream of funds from our funding partners. The availability of funding from our funding partners depends on many factors, some of which are out of our control. Changes in the credit environment may impact the funding costs and the terms of our agreements with funding partners, and we may not be able to obtain sufficient and sustainable funding from our funding partners if the funding cost increases significantly. In addition, our competitors in the retail credit facilitation markets may offer better terms to attract institutional funding partners away from us or form exclusive partnerships with them. We may not be able to maintain longterm business relationships with institutional funding partners in this evolving market. In addition, some of our funding partners have limited operating histories and experiences and we cannot rely on them for our funding. Our funding partners are subject to certain PRC laws and regulations, and in the event that all or some of them cease or modify their operations and cooperation with us as a result of existing or new regulatory requirements, the availability of our funding may be materially and adversely affected. 23 Table of Contents While we have made efforts to diversify funding sources, we cannot assure you that such efforts would be successful or funding sources for the loans we facilitate will remain or become increasingly diversified in the future. If we become dependent on a small number of funding partners and any such funding partners decide not to collaborate with us, change the commercial terms to the extent unacceptable to our borrowers or limit the funding available on our platform, such constraints may materially limit our ability to facilitate loans and adversely affect our user experience. As a result, our business, financial condition, results of operations and cash flow may be materially and adversely affected. Our business is subject to laws, regulations, and supervision by national, provincial and local government and judicial authorities, industry associations and other regulatory bodies. The laws, regulations and official guidance relating to our business are complex, evolving rapidly and may be subject to further changes. Non-compliance with any existing or new regulation may result in penalties, limitations and prohibitions on our business activities, and we have been modifying and may need to continue to modify our business operations in response to changes in laws and regulations. The industries in which we operate are highly regulated. Our businesses are subject to national, provincial and local laws, rules, regulations, policies and measures in China. See “Regulation—PRC Regulations.” These laws, rules, regulations, policies and measures are issued by the National Congress of China and its standing committee, the State Council, and different central government ministries and departments as well as provincial and local government authorities, and are enforced by different levels of regulatory agencies and by local authorities in each province in which we operate. As a result, there may be inconsistencies between the rules, regulations, policies, orders and guidance of various regulatory agencies. In order to comply with existing and new rules, regulations, policies and measures of each regulatory agency, we have modified, and may continue to modify, our business models from time to time, which could cause us to incur significant costs and expenses, divert resources and materially disrupt our operations, which could have a material adverse effect on our results of operations and financial condition. For example, in July 2020, the China Banking and Insurance Regulatory Commission, or the CBIRC, issued the Interim Measures for the Administration of Online Loans by Commercial Banks to provide detailed rules on online loans provided by commercial banks, which may require some of our funding partners to evaluate their cooperation entities and adjust their cooperation with us and thus have a potentially significant impact on our retail credit facilitation business. Our microloan companies are subject to the laws, regulations, policies and measures in Chongqing, Shenzhen and Hunan in areas of registered capital and of loan-to-capital and other leverage ratios, among others, and our financing guarantee companies are subject to the supervision of local financial authorities in Nanjing, Tianjin and other jurisdictions where their branch offices are located. Historically, some of our microloan companies and financing guarantee companies maintained leverage ratios that were above the maximum level allowed. As of the date of this prospectus, we have modified our microloan companies’ and financing guarantee companies’ business models in order to comply with the leverage ratio requirements and other laws, regulations, policies and measures for these companies in all of these jurisdictions. Historically, regulators have given us verbal and written guidance on our business practices, and we have modified our business operations based on such guidance. While we have not been subject to any regulatory penalties as of the date of this prospectus in connection with such microloan and financing guarantee companies’ business practices, we may be subject to regulatory warnings, correction orders, condemnation and fines and may be required to further modify our business if any of our microloan and financing guarantee companies is deemed to have violated national, provincial or local laws and regulations or regulatory orders and guidance. For example, on September 16, 2020, the CBIRC issued the Notice on Strengthening the Supervision and Management of Microloan Companies, or Circular 86. Adopted to regulate the operations of microloan companies, Circular 86 stipulates that the financing balance of a microloan company’s funding by bank loans, shareholder loans and other non-standard financing instruments shall not exceed such company’s net assets, and the financing balance of the microloan company funding by issuance of bonds, asset securitization products and other instruments of standardized debt assets shall not exceed four times of its net assets. Local financial regulatory authorities may further lower the leverage limits mentioned above. We are also subject to oversight by the Ministry of Industry and Information Technology, or 24 Table of Contents the MIIT, the Cyberspace Administration of China and the National Internet Finance Association of China in connection with our mobile applications. If we fail to comply with the requirements and standards set by the relevant authorities or if our apps fail to remain on the white list, mobile app stores including the iOS App Store and Android app stores may cease the distribution of our mobile apps and our business may be adversely and materially affected. There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. Recently enacted laws, rules and regulations may be subject to significant degrees of interpretation by PRC regulatory authorities. Because many of the laws, rules and regulations governing our businesses are relatively new, and because of the limited number of published judicial decisions and the non-binding nature of some of such decisions, we have encountered uncertainties as to the judicial interpretation and application of laws, and it is possible that laws may be interpreted and applied inconsistently in different jurisdictions. Such interpretations and application may conflict with our current practices, require changes to our business model or cause disruptions to our operations. For example, our ability to collect loans from borrowers may be hindered by uncertainties in the interpretation of PRC laws, rules and regulations. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have retroactive effects. As a result, we may not be aware of our violation of these policies and rules until after a violation has occurred. We might also not be able to foresee what regulatory measures the national, provincial and local government authorities may take and whether new regulatory measures would adversely impact our existing business or business plans. For example, though there is currently no specific regulation pertaining to the qualifications and operations of websites such as Lu.com, which helps us facilitate the distribution of financial products for our licensed product providers, new laws, rules, regulations, measures, polices or interpretations may arise in the future. Similarly, the qualified investor requirements and minimum investment thresholds for asset management products, trust products, private funds may be subject to further changes in the future. New regulations may also require us to obtain licenses for the processing and storage of borrower data, and request more detailed documentations for borrowers’ usage of loans, which may materially and adversely impact the flexibility and efficiency of our retail credit facilitation services and as a result the volume of loans we facilitate. Furthermore, there are currently few regulations on the use of technologies we deploy in our businesses, such as chatbots and AI, new laws, rules, regulations, measures policies or interpretations may arise in the future. We might not be able to be in compliance with the new requirements, and even if we successfully comply with such requirements through improvements, corrections and rectification, the business model may no longer be profitable or commercially viable. We expect the laws, rules, regulations, policies and measures governing our business, our cooperation with third-party business partners and the products we facilitate on our platform to continue to evolve. Our business activities and growth may be adversely affected if we do not respond to regulatory changes in a timely manner. Non-compliance with the applicable laws, rules, regulations, policies and measures, including as a result of ambiguities in them, may subject us to sanctions by regulatory authorities, monetary penalties, or restrictions on our business activities or new product introduction or revocation of our licenses, all of which could have material and adverse effects on our business, financial condition and results of operations. Any failure to obtain, renew or retain requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business, financial condition and results of operations. The PRC government extensively regulates internet-related businesses, including supervising foreign ownership, and requiring licenses and permits pertaining to the companies in internet-related businesses. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. We are required to obtain various approvals, licenses and permits from different regulatory authorities in order to offer certain categories of our loan product and wealth management product facilitation services online. 25 Table of Contents We have made efforts to obtain all the applicable approvals, licenses and permits, but due to the complexities, uncertainties and frequent changes in laws, rules, regulations and their interpretation and implementation, we may not always be able to do so, and we may be penalized by governmental authorities for facilitating products or providing services without proper approvals, licenses or permits. For example, we cannot assure you that we will not be required to obtain any additional internet content service provider license, or ICP license, for our current business operations. Moreover, as we continue to increase the product and service selection on our platform, we may also become subject to new or existing laws and regulations that did not affect us in the past. Failure to obtain, renew, or retain requisite licenses, permits or approvals may adversely affect our ability to conduct or expand our business. In March 2018, the National Internet Finance Rectification Office issued the Notice on Strengthening Rectification and Carrying Out Inspection Acceptance Work of Online Asset Management Operations, or Circular 29, which provided that without the license or approval from the PRC financial regulatory authorities, no entity may issue or sell asset management products through the internet. The application and interpretation of Circular 29, including the definition of “asset management product,” are ambiguous and may be inconsistent between different government authorities. Although we believe our role is only that of a platform between the providers and the purchasers of the wealth management products, which is not forbidden by Circular 29, the PRC regulatory authorities may have a different view and categorize our activities as the sale of wealth management products in violation of Circular 29 and other PRC laws and regulations. If the PRC government determines that we are operating or have operated our wealth management or other businesses without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or permits or imposes additional restrictions on the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue the relevant parts of our business or to impose restrictions on the affected portion of our business. While we may still be able to operate our wealth management business by cooperating with entities that hold the required license, approval or permit, any of these actions by the PRC government may have a material adverse effect on our business and results of operations. In addition, we are currently in the process of upgrading and moving our wealth management platform investors’ balances from our platform, which we offered as an add-on service to streamline our platform investors’ subscription process at their consent, to bank accounts with a commercial bank. With this new service, our platform investors can use their bank account balances to directly purchase wealth management products displayed on our platform. However, some platform investors have not yet made the upgrade or may not be willing to make such upgrades, and our practice of allowing our platform investors to top-up and transfer their balances on our platform to purchase wealth management products and withdraw the funds to their bank accounts may be deemed to be engaging in payment services without having obtained the required licenses in violation of Administrative Measures for the Payment Services Provided by Non-financial Institutions and the Notice of the General Office of the People’s Bank of China on Further Strengthening the Disciplinary Action against Unlicensed Transaction of Payment Business. Although we have not been subjected to any fines or other penalties as of the date of this prospectus in connection with the practice described above, we cannot be certain that the measures or the circular will not apply or that our existing or past practices would not be deemed to violate any existing or future laws, regulations and rules or subject us to regulatory penalties. Furthermore, we currently cooperate with third-party channel partners for borrower and platform investor acquisition. See “Business—Retail Credit Facilitation—Retail Credit Origination” and “Business—Wealth Management—Platform Investor Acquisition.” If we or these third parties are deemed to be providing investment advisory services without the requisite approvals, licenses or permits, they may be subject to regulatory actions and be prohibited from engaging in client acquisition activities, and as a result we may need to significantly modify our borrower and client acquisition model. This could have a material adverse impact on our business prospects, results of operations and financial condition. 26 Table of Contents We have modified our business model and practices in the past as a result of changes in laws, regulations, policies, measures and guidance, and we are subject to risks in connection with our legacy products and historical practices. If any of our legacy products and historical practices is deemed to violate any PRC laws or regulations, our business, financial condition and results of operations would be materially and adversely affected. Given the complexities, uncertainties and frequent changes in these laws, rules, regulations, policies and measures, including changes in their interpretation and implementation, we have historically modified our business models and practices due to shifts in regulatory requirements and our strategies. Among wealth management products, we ceased to facilitate the offering of structured alternative products originated by financial institutions for individual investors, which we refer to as business-to-consumer or B2C products, in the second half of 2017. Among retail credit facilitation products, we ceased to facilitate the offering of peer-to-peer products in August 2019, as well as stopped using funding from peer-to-peer individual investors as a funding source for our retail credit facilitation business in 2019. As of June 30, 2020, peer-to-peer products as a percentage of total client assets had fallen to 12.8%, and none of the new loans we facilitated in 2020 were funded by peer-to-peer individual investors. To facilitate the exit of investors after we discontinued our facilitation of the offering of B2C products in the second half of 2017, as a one-time event, we decided to repurchase certain trust plans, asset management plans and debt investments from our platform investors. As these trust plans, asset management plans and debt investments were overdue as of December 31, 2019, we recorded impairment of RMB1.0 billion (US$0.1 billion) and fair value loss of RMB0.7 billion (US$0.1 billion) in 2019. In the six months ended June 30, 2020, we recorded reversal of impairment losses of RMB63.1 million (US$8.9 million) and fair value gain of RMB46.2 million (US$6.5 million...
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Business writing

Attributes of your products and services translate into marketing activities that
will be required?

At Lufax Company, the only specific plan that will suit the business to meet its
objectives and measure its success is to remain relevant in the competitive market by
applying several strategies discussed here. For instance, the unique attributes of the
company's product type, which are both unsecured and secured, will enable it to gain
the ability to offer an outstanding customer experience. Therefore, all the services are
set to remain collective and comprehensive for full compliant post-origination. All the
marketing opportunities will have to be applied mainly in countries like the Philippines
and Malaysia. China as a country has a large economy that perfectly suits Lufax
products. They have, however, to be driven by consumption and investment for
everything to run out in the right manner. The plan will also cater to the global
economy,...


Anonymous
Just what I needed…Fantastic!

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