Qifu Technology announces $600 million convertible notes offering

SHANGHAI - Qifu Technology, Inc. (NASDAQ: QFIN; HKEx: 3660), a prominent AI-empowered Credit-Tech platform in China with a market capitalization of $247 million, disclosed today its plan to offer $600 million in convertible senior notes due 2030, targeting qualified institutional buyers. According to InvestingPro analysis, the company maintains a "GREAT" financial health score and is currently trading below its Fair Value, suggesting potential upside opportunity. This strategic financial move is aimed at bolstering the company’s share repurchase efforts, with the potential to enhance shareholder value.

The proposed offering, which hinges on market conditions, includes an option for initial purchasers to acquire an additional $90 million in notes within a 13-day period starting from the issuance date. With impressive revenue growth of nearly 25% in the last twelve months and strong cash flows that can sufficiently cover interest payments, Qifu Technology intends to channel the net proceeds from this offering into repurchasing its American depositary shares (ADSs) and/or class A ordinary shares under a new share repurchase plan approved by the board of directors in March 2025. This plan is supplementary to an existing repurchase initiative announced in November 2024.

The company anticipates that the offering will immediately contribute to its 2025 earnings per ADS upon closing. This expectation is based on the execution of concurrent repurchases and the cash-par conversion settlement mechanism incorporated in the notes.

The notes, once issued, will be unsecured obligations of Qifu Technology and will mature on April 1, 2030, unless repurchased, redeemed, or converted earlier. Operating with a moderate debt-to-equity ratio of 0.79 and maintaining a healthy current ratio of 1.41, the company appears well-positioned to manage this additional debt. Note holders will have the right to demand repurchase of their notes on April 3, 2028, or in the event of certain fundamental changes, at a repurchase price equal to 100% of the principal amount plus any accrued interest.

Additionally, the company may redeem the notes for cash under specific circumstances, including tax law changes or if less than 10% of the aggregate principal amount of the notes remains outstanding, but only before the 50th scheduled trading day before the maturity date.

Concurrent with the notes offering, Qifu Technology plans to repurchase a number of ADSs through privately negotiated transactions, a move expected to support the initial hedges of the notes’ purchasers. These repurchases, along with future buybacks under the March 2025 Share Repurchase Plan, are anticipated to counterbalance potential dilution to shareholders upon conversion of the notes.

The company has cautioned that the repurchase activities could influence the market price of its ADSs and/or class A ordinary shares and the trading price of the notes. Moreover, potential purchasers of the notes might engage in convertible arbitrage strategies that could also affect these prices.

The securities mentioned in the offering have not been registered under the Securities Act or any other securities laws and will be offered only to qualified institutional buyers in compliance with Rule 144A.

This announcement is based on a press release statement, and there is no guarantee that the notes offering will be completed as planned. For deeper insights into Qifu Technology’s financial health and additional investment analysis, including six more exclusive ProTips, visit InvestingPro for comprehensive coverage of this emerging fintech player.

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