PE-backed Zhong An climbs 9.2% on Hong Kong debut

The company sold 199.3 million shares at HK$59.70 apiece, having priced its IPO at the top end of the indicative range, according to a disclosure. The offering was more than 100 times oversubscribed. SoftBank Group participated as a cornerstone investor, covering up to 36% of the offering – or 71.9 million shares – and taking a 4.99% stake in the business.

Zhong An’s stock climbed as high as HK$70.50 on commencement of trading on September 28 before closing at HK$65.20.

The company was established in 2013 by nine founding shareholders, including Alibaba’s financial services affiliate Ant Financial, Tencent, and Ping An. Jack Ma and Pony Ma, the founders of Alibaba and Tencent, and Mingzhe Ma, chairman of Ping An, are credited as being the driving forces behind the business.

In 2015, a group of pre-IPO investors paid RMB5.78 billion ($931 million) for a 19.39% stake in Zhong An. A Morgan Stanley-controlled vehicle contributed RMB737.5 million, China International Capital Corp. (CICC) put in RMB750 million, while a wealth management platform operated by CDH Investments and Keywise Capital Management invested RMB1.49 billion and RMB1.47 billion, respectively. A fourth investor, a fund called Equine Forces, committed RMB1.33 billion.

Assuming the overallotment option would not be exercised, Ant Financial’s stake was set to be diluted to 13.82% after the offering, with Tencent and Ping An each owning 10.42%. The pre-IPO investors would see their holding fall to 13.84%.

Zhong An claimed to have sold over 8.2 billion insurance policies as of March 2017 and served approximately 543 million policyholders. It is the largest online insurance company in China, working from a cloud-based platform to provide insurance products that cover consumer goods and finance, health, automobiles, and travel. The company sells through partners such as Alibaba entities, online travel agency Ctrip, and installment payment platform Fenqile, as well as through insurance agents.

Gross written premiums came to RMB3.41 billion in 2016, up from RMB2.28 billion the previous year, while net premiums rose from RMB1.92 billion to RMB3.23 billion over the same period. Zhong An posted a net profit of RMB9.37 million last year, down from RMB44.3 million in 2015.

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• Topics
• Greater China
• Financials
• IPO
• Technology
• China
• Financial Services
• CICC
• CDH Investments Management
• Softbank