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Dec. 20 (NBD) -- Futu Securities International ("Futu"), a Hong Kong-based online brokerage firm invested by Tencent Holdings ("Tencent"), has filed confidentially for a U.S. initial public offering (IPO) of up to 500 million U.S. dollars, Reuters reported Wednesday citing sources with knowledge of the matter.

The Internet securities company is targeting a valuation of approximately 2.5 billion U.S. dollars and plans to make its debut in New York in early 2019, according to the Reuters report.

The reportedly planned listing of Futu comes after Tencent Music Entertainment, the music arm of Tencent, last week raised nearly 1.1 billion U.S. dollars in its U.S. IPO.

When contacted by the 21st Century Business Herald newspaper, relevant people at Futu didn't respond to the above-mentioned news.

It seems that Futu has a long-standing plan for its listing. Wu Biwei, CEO at Futu, deemed IPO as a milestone for the company, saying that getting listed was just a matter of time for Futu, but there was no specific timetable yet. Wu at the time estimated that Futu would raise 500 million U.S. dollars via IPO, an amount which is consistent with the Reuters report.

With regard to the reason why Futu chose to go public in the U.S., sources explained to Reuters that the company doesn't have to disclose key business and financial information to the market and rivals at the beginning as the U.S. allows confidential filings, and it's easier to lure more U.S.-based new investors and raise the securities company's profile overseas as a New York-listed firm.

Set up in 2012, Futu completed the Series C funding round this June, raising 145.5 million U.S. dollars from investors led by Tencent. That was the third time that Tencent led the investment in the securities firm. At the time, Tencent CEO Pony Ma said that he was bullish on Futu in the long term.

As a holder of types 1, 2, 4, 5 and 9 licenses issued by the Securities and Futures Commission of Hong Kong, Futu is able to invest in the stock markets of both the U.S. and Hong Kong.

Futu now has 380,000 clients and its mobile application providing market data, trading service and news feed, Futu Niuniu, boasts 5 million users.

It's noted that Futu's major rival Tiger Brokers also has finished its Series C funding round. It may be a good choice for Internet brokerage firms like Futu to get a head start in going public, a securities industry insider said to the 21st Century Business Herald.

However, Futu is facing challenges not only from its counterparts, but also from Internet giants which are making inroads in the brokerage sector as well as from traditional securities firms that are speeding up Internet-based services.

Data compiled by consultancy firm iiMedia Research, in the list of securities applications in sequence of Monthly Active Users for June 2018, applications run by securities firms took five seats among the top ten.

Tencent this September entered into a subscription agreement with China International Capital Corporation Limited ("CICC") to subscribe for approximately 207.5 million new H Shares of CICC. Moreover, the securities arm of Yunfeng Capital co-founded by Alibaba's founder Jack Ma has submitted application for the securities license and the China Securities Regulatory Commission has accepted the filings.

Email: gaohan@nbd.com.cn