PE-backed Ping An fintech spin-out pursues US offering

The company, which operates a technology-as-a-service platform for over 3,700 customers, including all of China’s major banks, announced in February 2018 that it had received $650 million in funding from IDG and SBI, among others. The post-money valuation was $7.5 billion.

According to the prospectus, $750 million was raised from Series A round investors in January and April of 2018. An investment arm of China Bank of Communications, Fangyuan Investment Management, and SoftBank Vision Fund are named alongside SBI and IDG. SBI is the only external shareholder with a greater than 5% stake, owning 6.1%. Ping An-related entities hold 89.8%.

OneConnect claims to provide cloud-based solutions that help customers increase revenue, manage risks, improve efficiency, enhance service quality and reduce costs. Since its establishment in December 2015, the company has supported financial institutions in handling RMB1.8 trillion ($300 billion) of transactions. During the nine months ended September, it facilitated 135,000 anti-fraud checks, 4.2 million credit risk assessments, and the processing of 13,000 auto insurance claims.

China's financial services industry had RMB334.9 trillion in assets as of December 2018 and generated RMB14.1 trillion in revenue during that year. Over the same 12-month period, Chinese financial institutions spent RMB152.2 billion on technology, according to Oliver Wyman. It projects annual spending will reach RMB400.8 billion by 2023.

OneConnect offers customers products at low or even no charge in order to encourage adoption. It then seeks to deepen relationships with those customers through cross-selling and platform integration. The company takes small upfront implementation fees and then generates the bulk of its revenues based on transaction volume generated through its platform.

Revenue came to RMB1.41 billion in 2018, up from RMB581.9 million a year earlier. Over the same period, OneConnect’s net loss grew from RMB607 million to RMB1.19 billion. The losses were largely due to substantial increases in marketing, administrative and financing costs. The company noted that its business is still at an early stage of development and it would likely continue to incur substantial expenses relating to commercialization and promotion.

OneConnect will become the second technology-focused Ping An subsidiary to go public. Ping An Healthcare & Technology, operator of the Ping An Good Doctor platform that connects consumers and patients with healthcare service providers, listed in May 2018. Lufax, an online lending and wealth management platform, achieved a valuation of $39.4 billion in its most recent round, while Ping An Healthcare Management – known as Ping An HealthKonnect – is worth $8.8 billion.

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• Topics
• Greater China
• IPO
• Financials
• Technology
• China
• Ping An
• Softbank
• IDG capital
• SBI Holdings