China’s first and largest internet-only insurer, Zhong An Online Insurance, raised US$1.5 billion in an initial public offering recently, making it the first major fintech listing in Hong Kong.
With an oversubscription of 391.7 times from retail investors, the company had priced its IPO at the top end of the expected range. Its shares surged by as much as 18 percent on their trading debut on Sept. 28.
Zhong An benefits from the “Ma effect”, with China’s most prominent business leaders — Tencent’s Pony Ma Hua-teng, Ping An’s Peter Ma Ming-zhe and Alibaba’s Jack Ma Yun — joining hands to be the company’s major shareholders.
Zhong An chief executive Chen Jin expects the percentage share of revenue derived from Alibaba and other key equity holders to gradually drop in the near future, the Hong Kong Economic Journal reports.
“Even if they were not shareholders of Zhong An, we would seek to go into business with them, as they are undeniably the leading players in their respective fields,” Chen said.
According to the company’s interim report, the sale of insurance contracts to related parties reached 19.5 million yuan (HK$22.8 million), a 72 percent year-on-year drop from 70.8 million yuan. But in the same period, 195 million yuan was paid to Ant Financial as technical service fees, a 15 percent year-on-year increase.
Zhong An has a leading market position in the ecosystem-oriented “insurtech” market in China, operating in lifestyle consumption, consumer finance, health, automobile and travel insurance.
Chen said health and automobile-related insurance is a major driver of future growth. He expects insurance products in health and consumer finance to contribute a major share of revenue soon.
Chen said Zhong An Technology, which was incorporated last year, would be another important source of income.
Zhong An Technology works on the R&D of internet technologies, as well as exports and monetizes technology solutions.
It will continue to focus on developing technological capabilities in artificial intelligence, big data analytics, blockchain and cloud computing to strengthen the company’s technology leadership, Chen said.
Zhong An Technology began to generate revenue, amounting to 2.9 million yuan, in the second quarter of 2017.
Chen said the company has established three product lines and they have signed agreements with several business partners.
The company plans to report Zhong An Technology’s financial results separately.
Hong Kong has been criticized for lagging behind mainland China in fintech development.
Chen said Hong Kong is a relatively small market for the fintech industry, so cooperation with mainland China in technology, business and talent is indispensable.
Zhong An does not have a license to offer its products in Hong Kong but Zhong An will “certainly enter the Hong Kong market at a certain stage of development”, Chen said.
He said the company might try to expand its overseas presence by exporting technology capabilities to foreign partners.
The company has signed an agreement with insurance companies in Japan, offering insurance products to Chinese tourists going to there.
This article appeared in the Hong Kong Economic Journal on Oct. 3
Translation by Ben Ng
[Chinese version 中文版]
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