Telecommunications firm SoftBank has agreed to acquire a 5% stake in China-based online property and casualty insurance provider ZhongAn when it floats in Hong Kong later this month.
The proposed investment was confirmed in a stock exchange filing yesterday, as ZhongAn set the range for its IPO. It will issue 199 million shares priced between HK$53.70 and HK$59.70 ($6.88 to $7.65), meaning it could raise up to $1.52bn.
SoftBank will buy 72 million shares through the offering, meaning it could invest up to $550m. It has the option to do so off its own balance sheet, or through the $93bn Vision Fund it operates, and the offering is expected to take place on September 28.
ZhongAn was formed in 2013 by internet company Tencent, insurance firm Ping An and Ant Financial, the financial service affiliate of e-commerce group Alibaba. The former two own 12.1% stakes in the company while Ant Financial holds 16%.
ZhongAn offers about 300 policies and its most popular options include covering the cost of products bought online and protecting against flight delays. It has sold in excess of 7.2 billion policies to a total of more than 490 million customers.
SoftBank said in a press statement: “ZhongAn is the clear leader in China’s insurtech space. This strategic investment offers us a unique opportunity to participate in the country’s promising insurtech market.
“We take a long-term view on disruptive companies like ZhongAn. With its cutting-edge technologies, ZhongAn is building a robust, innovative online-only insurance business in China and is effectively transforming the insurance landscape there.”
ZhongAn’s investors also include Morgan Stanley, China International Capital, CDH Investments and Keywise Capital Management, the participants in a $934m round in 2015 that valued the company at $8bn.