China’s First Online-Only Insurer Proves Big Hit in IPO

China’s First Online-Only Insurer Proves Big Hit in IPO

Luo Qi

Date: Wed, 09/20/2017 - 10:19 / source:Yicai
China’s First Online-Only Insurer Proves Big Hit in IPO
China’s First Online-Only Insurer Proves Big Hit in IPO

(Yicai Global) Sept. 20 -- Shares in China’s first internet-based insurance firm, ZhongAn Online P&C Insurance Co. [HKG:6060], are in strong demand are its initial public offering in Hong Kong on Sept. 18.

The firm’s major shareholders include Alibaba Group Holding Ltd.’s [NYSE:BABA] finance arm, Ant Financial Services Group, tech and gaming giant Tencent Holdings Ltd. [HKG:0700] and Ping An Insurance Group Co. of China Ltd. [SHA:601318; HKG:2318].

Investors showed great interest in the stock, an informed source told Yicai Global. Margin deposits exceeded HKD10 billion (USD1.28 billion) just after the IPO started at 9.00 a.m., and the total value of margins offered by brokerages rose to HKD49.4 billion in the evening.

The share offering for retail investors was over-subscribed 82 times over on the first day of trading.

Institutional investors also welcomed the stock, with at least 100 investors attending the marketing event held by the company in Hong Kong the day of the offering.

The firm’s shares are pretty expensive relative to its valuation and the issue size is quite big, but the stock’s performance depends on market liquidity, said a local investor who opted to remain anonymous.

Some market participants noted that there is only one cornerstone investor, despite the scale of the IPO. Typically, when an offering is worth more than HKD10 billion, at least half of the shares are held by cornerstone investors. In this case, Japan’s Softbank Group Corp. [TYO:9984] bought 71.91 million H-shares, the company said, making up 36.08 percent of total shares issued worldwide and 4.99 percent of total equity.

Market volatility was the reason behind the firm’s investment returns slumping 81.05 percent last year, chief financial officer Deng Ruimin said at the marketing event. ZhongAn plans to assign more investment managers to assist with financial asset management and spread risks, he added. It will also increase the proportion of fixed-income assets.

Follow Yicai Global on

Keywords: IPO, ZhongAn Insurance, ANT FINANCIAL, TENCENT, Ping An Insurance