Zhongan Online P&C Insurance Pulls H.K. IPO Plans; China Listing Eyed: Sources

By and Prudence Ho | December 21, 2016

Zhongan Online P&C Insurance Co. scrapped plans for an initial public offering in Hong Kong or the U.S. and is instead focusing on a listing in mainland China, people familiar with the matter said.

Lukewarm overseas interest and an attempt to avoid competing with a possible offering from major shareholder Ant Financial has prompted the insurer to consider listing in China instead, one of the people said, asking not to be identified as the discussions are private. Zhongan Online, which has more than 400 million customers, said in August that it was targeting an IPO in either Hong Kong or the U.S. as early as 2017.

Backed by Ant Financial, owner of Alipay, and Tencent Holdings Ltd., Zhongan works with internet companies to provide policies for China’s younger users in the automotive, health care and online shopping sectors. The company operates in an online insurance market that is expected to reach 2 trillion yuan ($300 billion) by 2025, a 10-fold increase from last year, according to Shanghai-based consultant IResearch.

Cathy Luo, a spokeswoman for Zhongan, said by phone that the company has always had an IPO plan, though it hasn’t committed to any timeline or venue, declining to comment further.

Globally, financial technology companies are facing a tough year with U.S. online lending company Social Finance Inc. pushing back its IPO plans as sentiment wanes. Funding for financial technology startups in the private market also fell 17 percent to $2.9 billion in the third quarter, according to a report from KPMG International and CB Insights.

Zhongan has told bankers to stop preparations for the Hong Kong IPO, one of the people said. While the initial plan was for a 2017 listing, switching to China will likely take longer, the person said.

Zhongan completed a series A funding round in May last year to raise about $1 billion at a valuation of about $8 billion. The company expects policy revenue to rise 80 percent to 150 percent this year from the 2.28 billion yuan it booked in 2015, the company’s Chief Financial Officer John Bi said in August, declining to disclose more financial details.

Ant Financial, formally known as Zhejiang Ant Small & Micro Financial Services Group, is Zhongan’s largest shareholder with a 16 percent stake. The affiliate of Alibaba Group Holding Ltd. is considering an IPO in 2017, people familiar with the matter have said.

Tencent and Ping An Insurance (Group) Co. each hold 12 percent stakes in Zhongan while Morgan Stanley, China International Capital Corp. and CDH Investments are also investors.

Zhongan competes with companies including Taipei-based Cathay Financial Holding Co. Ant Financial also holds a controlling stake in the Chinese unit of Cathay Financial as the companies are exploring opportunities in the same field.

The development from Zhongan follows a muted Hong Kong listing from Chinese selfie-application and phone maker Meitu Inc., whose shares have fallen since their debut last week even after pricing its IPO at the lower range of its targeted range.

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