ZhongAn, China’s first online-only insurance company, announced an initial public offering in Hong Kong in which it plans to raise up to $1.5 billion for a potential valuation of $10 billion. The share sale will begin Monday morning with SoftBank Group (SFTBY) as a cornerstone investor with a 5% stake. The listing is expected to be one of the year’s largest technology offerings in Hong Kong.
The co-founders of ZhongAn include Jack Ma, the Chinese billionaire and executive chairman of Alibaba Group (BABA), and Pony Ma (no relation), the chairman of Tencent Holdings (TCEHY). Ant Financial Services, an affiliate of Alibaba Group Holding, is among the company’s biggest shareholders. Few other technology platforms are backed by both Ant and Tencent.
In a recent online sale, the company sold 13,000 policies per second. Despite large sales volumes, the company has not yet demonstrated large profits, netting $1.4 million on earnings of $488 million in 2016. They expect a net loss in 2017, which they attribute to growth costs, which resulted in a $31 million net loss in the first quarter.
The Chinese insurance sector is seen as a high-growth sector, as insurance uptake in the country is relatively low. More than 60% of ZhongAn’s customers are aged 20 to 35.
Shares are expected to begin trading on the Hong Kong stock exchange on September 28.
