Chinese Insurer Ping Ans Fintech Arm OneConnect Files For US IPO

OneConnect Financial Technology, the fintech unit of China’s largest insurer Ping An Insurance, announced on Wednesday that it has filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission.

The company is set to raise $100 million – a placeholder likely to change – by floating shares on the New York Stock Exchange or Nasdaq Global Market. The company is yet to decide the price range for the proposed offering and the number of American Depositary Shares (ADSs) and ordinary shares to be offered.

OneConnect, which counts Japan’s SoftBank among its main investors, changed the listing venue to New York from Hong Kong a few months ago in pursuit of a higher valuation. The company was earlier looking to go public in Hong Kong as early as September 2019, according to a person with direct knowledge of the matter cited in a Reuters report.

The Shenzhen-based company, which provides technology solutions to small and medium-sized financial institutions, is eyeing an IPO as the technology spending market for Chinese financial institutions totalled 152.2 billion yuan ($21.3 billion) in 2018, and is expected to grow at a compound annual growth rate (CAGR) of 21.4 per cent to 400.8 billion yuan ($56.1 billion) in 2023, according to Oliver Wyman.

OneConnect, founded in December 2015, operates as a technology-as-a-service platform to provide technology applications and tech-enabled business services to help financial institutions manage risks, improve efficiency, reduce costs and enhance service quality. Its offerings cover sales and marketing, risk management, customer service, and technology infrastructure solutions, such as data management and cloud services.

The company had over 3,700 institutional customers in China, including all major banks, 99 per cent of city commercial banks and 46 per cent of insurance companies which collectively reach hundreds of millions of end-customers as of September 30, 2019, according to its prospectus.

The OneConnect platform has supported Chinese financial institutions in serving 1.8 trillion yuan ($0.3 trillion) of transactions for their end-customers since the inception. In the nine months ended September 30, 2019, it facilitated over 135,000 anti-fraud checks, 4.2 million credit risk assessments, and the processing of approximately 13,000 auto insurance claims, shows the prospectus.

OneConnect, which started to expand business outside of mainland China in 2018, has set up subsidiaries in Hong Kong, Singapore and Indonesia. The company also delivers services to financial institutions in Southeast Asia, covering countries like Thailand, Indonesia, Malaysia, and the Philippines.

In Southeast Asia, the company mainly offers two smart lending products: SeekCap, a lending platform in the Philippines that helps the underserved micro, small and medium enterprises manage cash flow and grow business, as well as a multi-finance platform that serves unbanked and underbanked Indonesians with access to loans to finance their purchase of vehicles.

The company’s revenue increased by 142.9 per cent from 2017 to 1.41 billion yuan ($197.8 million) in 2018, and further grew to 1.55 billion yuan ($217.5 million) in the first nine months of 2019.

The net loss was 607.0 million yuan, 1.19 billion yuan ($166.5 million) and 1.05 billion yuan ($146.8 million) in 2017, 2018 and the first nine months of this year, respectively, with the net loss as a percentage of total revenue decreasing during the period.

Prior to the IPO, Sen Rong Limited holds a 50 per cent stake in OneConnect, while Ping An Insurance has a 39.8 per cent stake through Bo Yu Limited. Japanese financial firm SBI Group and its affiliated entities own 6.1 per cent shares.

Previously, OneConnect raised $650 million in its maiden funding round in February 2018, which valued the firm at $7.5 billion.

The company will list its shares under the ticker “OCFT.” Morgan Stanley, Goldman Sachs, J.P. Morgan Securities and Ping An of China Securities (Hong Kong) Company Limited will act as active joint bookrunners of the deal.