Zhongan Mulls IPO in Hong Kong, U.S. Within Next 18 Months

  • Online insurer would also condier pre-IPO funding rounds
  • Zhongan using data-technology to drive online insurance

Zhongan Online P&C Insurance Co., with more than 400 million customers, is targeting an initial public offering in the next 12 to 18 months as it targets winning over more younger consumers.

While the company currently favors a listing in Hong Kong, it’s also considering holding the IPO in the U.S., Chief Financial Officer John Bi said. Zhongan would also consider a pre-IPO private funding round to attract global investors and provide strategic value to its insurance business, he added.

Backed by Chinese giants Ant Financial 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.

Hong Kong’s listing “momentum is good,” Bi said in a phone interview on Monday. “For our next round of private fundraising, we are looking to attract influential global insurance or technology shareholders to endorse our development.”

Zhongan focuses on users who are used to simple procedures when shopping online and have no patience to fill in traditional insurance application forms, Bi said. He declined to say how much the company would seek to raise or the potential valuation except to compare Zhongan to global technology giants.

“We think of our peers as disruptive technology companies including Google, Amazon and Apple" instead of traditional insurance companies.

Google owner Alphabet Inc. has a price to earnings ratio of about 30, while Amazon trades at 191 times profit. China’s Ping An Insurance (Group) Co. has a PE ratio of 10 and Apple’s is about 13 times.

Zhongan completed an A series funding round in May last year to raise about $1 billion at a valuation of about $8 billion, Bi said. The company expects policy revenue to rise 80 percent to 150 percent this year from the 2.28 billion yuan it booked in 2015, he said, 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. Tencent and Ping An each hold 12 percent stakes. It also counts Morgan Stanley, China International Capital Corp. and CDH Investments as investors, according to Bi.

Zhongan’s flagship product is one that allow merchants who sell on Alibaba Group Holding Ltd. cover shipping losses when customers return goods, ranging anywhere from 10 to 100 yuan, depending on the performance history of the seller. It also provides insurance to customers of Xiaomi Corp. to protect the screens of new smartphones and is creating a service to lower premiums to drivers with good records.

"It’s valuable that we are adjust pricing based on user behavior pattern," Bi said. "When we create a product its completely driven by the results we get from our big data."

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

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