Zhong An to Sell 5-10% Stake Ahead of IPO

Zhong An Online Property and Casualty Insurance is planning to sell a 5-10% stake in the company to a handful of investors, according to a report from Reuters. The sale will help Zhong An raise 10 billion yuan ahead of its planned IPO in mainland China.

The company is China’s first online-only insurer. Zhong An currently has two major shareholders: Tencent Holdings Ltd (HK:0700) at 12% and Ant Financial at 16%.

Zhong An’s investors would be expected to commit to a minimum investment of 1 billion yuan each. The investment funds would be used to expand business and give the company time to grow ahead of its IPO.

Zhong An’s proposed valuation has yet to be decided.

China’s Largest Insurance Provider

 

The company offers more than 300 insurance products and has more than 535 million customers.

Zhong An was founded in 2013 by Tencent’s Chairman Pony Ma, Alibaba’s Executive Chairman Jack Ma, and Ping An Insurance Group Co’s Chairman Ma Mingzhe.

When making a purchase online through Alibaba or one of the company’s platforms, consumers have the option of purchasing insurance to cover the cost of shipping if they should need to return the items in the future.

Shipping return insurance was Zhong An’s primary product in 2016, accounting for half of its business. Insurance against flight delays was the company’s second best-selling product.

Zhong An raised 5.78  billion yuan in 2015 from a group of prominent investors, including China International Capital Corp Ltd (HK: 3908), Morgan Stanley (N: MS), SAIF Partners and CDH Investments. At the time, the company was valued at $8 billion.

Zhong An is one of many Chinese fintech companies attempting to raise money ahead of its IPO launch. Last year, Ant Financial raised $4.5 billion in one financing round. Lufax, a lending and wealth management platform, raised $1.2 billion in 2016.