Tax Consultant Lichen China Files for $25 Million US Listing

The profitable smallcap boasts of holding a 0.5% market share in China's financial and taxation services market.
May. 06, 2022 17:49
Tax Consultant Lichen China Files for $25 Million US Listing

(CapitalWatch, May 6, New York) Lichen China Ltd., operating in China's tax consulting and fintech industry, has filed for a $25 million initial public offering in New York.

The operating subsidiaries of Lichen, with headquarters in Jinjiang, provide financial and taxation services in China and boast of being present in the market for 17 years. According to industry analysis firm Frost & Sullivan, in 2019, Lichen held a market share of 0.5% in this segment in China.

Since 2019, the company is also engaged in software and maintenance services for enterprises, mainly in the higher education segment.

For 2021, Lichen reported $34.3 million in revenue, up 12% year-over-year. Net income increased to $8.5 million from $6.4 million in 2020, according to the company's filing with the SEC.

In a disclaimer in its prospectus, Lichen noted that it is not currently subject to cybersecurity review before an initial public offering in the U.S. since it counts less than one million users' personal data. In other regulatory hurdles, it is unclear whether Lichen's auditor TPS Thayer will be able to comply with the Holding Foreign Companies Accountable Act, as under current laws, approval from Beijing is pending.

Lichen China expects to sell 6.25 million of its ordinary shares at $4 apiece. The company said it plans to use the proceeds to expand its financial and taxation services business, boost R&D, improve brand recognition, and for working capital.

The company has applied to become publicly traded on the Nasdaq Capital Market under the stock ticker "LICN." Univest Securities is underwriting the deal.

Separately, Reuters reported Friday that U.S. officials have arrived in China to resolve a longstanding battle over audit inspections of U.S.-China listed companies.