Zhongan says favors IPO in Hong Kong

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 with a preference to list in Hong Kong.

The company would consider a pre-IPO private funding round to attract global investors and provide strategic value to its insurance business, Chief Financial Officer John Bi said.

The company hasn't ruled out the United States as a listing venue, and is currently studying both markets, he added.

Backed by 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 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.

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 as much as 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.

Bloomberg