Online insurer plans IPO

Visitors pass the exhibition stand of ZhongAn Online Property and Casualty Insurance Co Ltd in Hangzhou. [Long Wei/for China Daily]

ZhongAn, backed by '3 Mas', hopes to raise $1.52 billion

ZhongAn Online Property and Casualty Insurance Co Ltd, the mainland's first internet-only insurer, opened its retail book on Monday for a Hong Kong initial public offering primed to raise up to HK$11.9 billion. ($1.52 billion)

The insurer, backed by the "three Mas"－Alibaba founder Jack Ma Yun, Tencent's Pony Ma Huateng and Ping An Insurance chairman Ma Mingze－plans to offer 199 million new shares at HK$53.7 to HK$59.7 apiece, with minimum investment HK$6030.16 for a board lot of 100 shares.

The offer, scheduled to close this Thursday and attracting cornerstone investment of HK$4.3 billion from Softbank's giant Vision Fund, puts ZhongAn on course to become the first-ever insuretech flotation in Hong Kong.

Chief Executive of ZhongAn Jeffrey Chen Jin said on Sunday that the company positions itself as an insuretech firm more than an insurance broker. "The company is growing fast, betting big on the insurance technology market."

"We hope the listing in Asia's financial hub, where we are looking to attract more long-term investors and build up our brand image, could equip us with sufficient capital to do more business."

Hannah Li Wai-han, a Hong Kong-based strategist at UOB Kay Hian, noted that such a company's "fast-pace growth stage usually comes with huge capital investment. This may explain why the company's combined ratio, a measure of expenses to premium income, has stayed above 100 percent over the past three years.

"The insure-tech company is looking to gain momentum from an eight-month rally in Hong Kong's benchmark Hang Seng Index, which hit a two-year high last month and extends the long but rare winning streak to this month. You can see the enthusiasm of Hong Kong retail investors subscribing for its shares run really high," Li added.

The Hang Seng Index began the week on a positive note, up 1.27 percent to finish at a new two-year high of 28,159.77 points. The offering sent Tencent's share 2.13 percent up to hit an all-time high of HK$346.

About 95 percent of the shares will be offered to international investors and the rest is reserved for retail investors in Hong Kong. Proceeds from the share sale will be used to strengthen its capital base to shore up business growth, according to the terms.

On completion of the offering, billionaire Jack Ma Yun's Ant Financial, whose holdings in the insurer will be cut from 16.04 percent to 13.82 percent, still stands as the biggest shareholder, with Tencent and Ping An holding a 10.42 percent stake each.

The Shanghai-based company, founded in 2013 and starting its business with "shipping return insurance", where consumers pay a small fee to cover the return of products bought on e-commerce giant Alibaba's Taobao website, is looking to price the offering on Sept 27 and begin trading in the Main Board on Sept 28.

Elinor Leung, head of CLSA's Asia telecom and internet sector, said the business model of ZhongAn is quite "creative". The company, which had sold more than 8.2 billion policies to 543 million people by March 2017, is working with the mainland's largest online travel agency Ctrip to roll out the popular "flight accident and delay insurance".