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Investment, Private Equity

SoftBank Vision Fund Eyes $500M Investment In ZhongAn Insurance’s US$1.5B IPO

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SoftBank Vision Fund, a US$93 billion investment fund backed by SoftBank Group Corp with a significant commitment from Saudi Arabia’s sovereign wealth fund, is considering a US$500 million investment in the Hong Kong initial public offering of ZhongAn Online Property and Casualty Insurance Co., Ltd.

ZhongAn Online is China’s first Internet-only insurer jointly established by Alibaba Group, Tencent Holdings and Ping An Insurance in 2013. The company is geared toward raising US$1.5 billion in an IPO in Hong Kong at a valuation of as much as US$11 billion, according to media reports citing insiders. ZhongAn will offer shares at HK$53.70 to HK$59.70 apiece in the IPO, which will launch as early as September 18.

SoftBank Vision Fund raised US$93 billion in a first closing in May with commitments from SoftBank, Saudi Arabia’s Public Investment Fund, Mubadala Investment Company of the United Arab Emirates, Apple Inc., Foxconn Technology Group, Qualcomm Inc. and Sharp Corp. The fund is likely to invest as much as US$500 million, or one third of the size of the IPO, as a cornerstone investor in ZhongAn’s IPO.

SoftBank Vision Fund focuses on investing in frontier technologies that will shape the future including artificial intelligence, robotics and self-driving technology.

Ant Financial, the financial services affiliate of Alibaba Group, is ZhongAn’s biggest shareholder with a 16% stake. Ping An Insurance and Tencent Holdings each hold 12% of ZhongAn, according to a preliminary prospectus filed to the Hong Kong exchange in June.

With the backing of two Chinese tech superpowers and one of the largest insurer in China, ZhongAn was able to make a profit the second year after its establishment. The online market place sold insurance policies to massive amount of existing users of the three companies, including coverage for products bought on Alibaba’s e-commerce platforms, health insurance, travel insurance and car insurance.

ZhongAn, which obtained China’s first Internet insurance business license, recorded net profit of RMB37 million, RMB44 million and RMB9 million from 2014 to 2016, according to its prospectus.

ZhongAn raised RMB5.8 billion (US$886 million) from a group of investors including Morgan Stanley, China International Capital Corp., CDH Investments and Keywise Greater China Opportunities Master Fund in a 2015 financing round. That round valued the company at RMB49.6 billion (US$8 billion), ZhongAn said at the time.

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