Xiaomi-Backed Tiger Brokers Successfully Raises $104 Million in US IPO

Hong Kong Stock Exchange Trading Floor
Chinese investors looking for a way out of a volatile stock market are looking to diversify their investments in Hong Kong (Photo: WiNG / Wikimedia Commons)

Despite holding only a downsized initial public offering (IPO), Up Fintech Holding Limited, the parent company of Chinese online brokerage platform Tiger Brokers, was able to raise $104 million on the Nasdaq stock exchange on Wednesday. This took place just weeks after the company's homegrown counterpart Futu Holdings Limited was also able to raise $90 million during its New York IPO.

While relatively new the industry, Tiger Brokers is backed by one of the most dominant Chinese tech company, the smartphone maker Xiaomi.

Following its initial public offering, Tiger Brokers will be listed under the symbol "TIGR." The company offered 13 million American depositary shares or ADSs. Each depositary share costs $8, each of which represents 15 Class A ordinary shares. The share price was a little bit higher compared to the expected market range of around $5 to $7.

China's domestic online retail securities market is already considered as the largest in the whole world. With regards to the offshore assets, China's online retail trading volume is estimated by market experts to at least triple from $445.4 billion back in 2018 to an impressive $1.36 trillion by 2022. This estimate was provided by consulting firm Oliver Wyman.

Founded in 2014, Tiger Brokers provide Chinese investors both home and abroad a secure and fast online trading platform. The platform gives users the ability to trade stocks in mainland China, the United States, and Hong Kong. The platform is able to do this through the stock connect scheme which was put in place between Hong Kong and China's mainland stock exchanges.

Unlike most traditional trading platforms, Tiger Brokers was able to capture one of China's most important trading demographics, and these are the young Chinese investors. More than 70 percent of Tiger Brokers' users are individual brokers who are under the age of 35. This data was taken by the end of 2018, and the company is positive that the trend will continue to grow within the foreseeable future.

Before the IPO, Chines smartphone maker Xiaomi is Tiger Brokers' second largest shareholders with 14.1 percent stake. On the other hand, Interactive Brokers Group, which is an automated global electronic broker, owns a 7.7 percent stake on the company. The company's founder and former developer from Chinese internet company NetEase, Wu Tianhua, owns an 18.9 percent stake.

As for Futu, the company received backing from Tencent, Matrix Partners China, and Sequoia.

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