Bottom line: ZhongAn should perform reasonably well over the short- to medium-term by drawing on its big-name investors for business, but faces uncertainty due to an untested business model.
ZhongAn banks on online insurance
There’s not a ton to say about the year’s first blockbuster IPO from the fintech realm, since it really went pretty much according to plan. I’m talking about the just-concluded listing for online-only insurance startup ZhongAn Online Property & Casualty Insurance, which was almost guaranteed a strong debut when its shares began trading yesterday in Hong Kong.
The bigger question for ZhongAn and its other fintech peers will be whether they can continue to thrive once the spotlights are gone and they have to do business over the longer term. Anyone can pretty up their books in the run-up to an IPO, but keeping the business flowing afterwards is often a bit more problematic. ZhongAn could be a good case in point, as its product lineup seems to be constantly evolving, as does the lineup for many of these fintech firms, due to individual and broader industry factors. Read Full Post…
Bottom line: ZhongAn’s and Qudian’s IPOs are likely to price and debut strongly over the next few weeks on excitement about China fintech, while Best’s will debut to indifference following the slashing of its size.
ZhongAn, Qudian IPOs look hot
Three companies likely to list in New York and Hong Kong by the end of this month are setting the tone for what’s set to be a busy fall for similar new offshore offerings from Chinese companies. Two of those are coming from the hot fintech sector, where online microlender Qudian and online insurance seller ZhongAn appear to be drawing strong interest in IPOs that could each raise north of $1 billion. But logistics company Best Inc is moving firmly in the other direction, with the announcement that it has just slashed the size of its fund-raising plan by nearly half.
Neither of these themes is completely surprising, since fintech has become a hugely lucrative area in China due to the relatively greenfield nature of the sector. Until only very recently, nearly all financial services in China were dominated by state-run companies, which aren’t exactly known for their innovation and embrace of technology. That’s also partly true for logistics, though in that case the industry has quickly become a bit of a bloodbath plagued with cutthroat competition among around 10 major players. Read Full Post…
Bottom line: Beijing regulators should take a more hands-off approach to outbound M&A by major institutional buyers like Anbang, and let them take more direct responsibility for their investment decisions.
Anbang targeting InnVest?
A new showdown could be brewing between Beijing and China’s newly minted field of outbound investors, as reports emerged last week that insurer Anbang was planning a major new Canadian acquisition less than 2 months after China’s insurance regulator reportedly vetoed a previous similar plan. The latest deal would see Anbang buy InnVest Real Estate Investment Trust (Toronto: INN-UN), one of Canada’s largest hotel owners, following its failed bid in March to buy US hotel giant Starwood (NYSE: HOT), operator of the Westin and Sheraton brands. Read Full Post…
Bottom line: Starwood’s board is likely to reject a new raised offer for the company from Anbang and keep its recommendation to accept a lower bid from Marriott, which offers more certainty of closing a deal and also better long-term prospects.
Anbang ups the ante in Starwood bidding war
The latest development in the bidding war for US hotelier Starwood (NYSE: HOT) looks both expected and unexpected, with word that Chinese suitor Anbang has upped its offer to top the most recent bid from rival Marriott (NYSE: MAR). I say the move looks expected based on my previous assessment that Anbang looked determined to buy Starwood at any price. But the new bid is also a bit unexpected because Chinese media reported last week that the nation’s insurance regulator was likely to veto such a deal, which seemed to show Anbang might drop its pursuit of the purchase that is now valued at $14 billion.
The latest developments also include a response from Marriott, which seems to be saying “enough already”. That would indicate Marriott doesn’t plan to raise its latest bid, which is about 6 percent lower than the new one from Anbang, and instead let Starwood’s board decide which offer to recommend. Read Full Post…
Bottom line: Alibaba, Tencent and Ping An’s online insurance joint venture should easily find backers for its first major fund-raising, and could even exceed its $8 billion valuation target due to strong demand.
Zhong An targets $1 bln in new funds
This year’s list of major private funding raising by high-tech firms continues, with word that an online insurance joint venture involving 2 of China’s biggest Internet names is seeking to raise a hefty $1 billion in its first funding round. This particular venture certainly has a strong pedigree, as it’s backed by Alibaba (NYSE: BABA) and Tencent (HKEx: 700), China’s 2 leading Internet companies with a combined market value of nearly $400 billion. The pair are joined in the venture by Ping An (HKEx: 2318; Shanghai: 601318), China’s second largest insurer and also one of the most aggressive players in its space. Read Full Post…
After spending most of its life in relative obscurity, Chinese insurer Anbang is suddenly making steady headlines on the global stage with word of 2 major new deals in Europe and Asia, following its landmark agreement last week to buy New York’s storied Waldorf Astoria hotel for nearly $2 billion. The larger of the latest deals has Anbang in talks to buy a major stake in South Korea’s Woori Bank, while the smaller has it buying Belgian insurer Fidea. Meantime, Anbang’s earlier landmark Waldorf deal is showing early trouble signs, with word that some US diplomats are expressing concerns about the sale over the potential for spying. Read Full Post…
The uneasy partnership formed more than half a year ago between US insurance giant AIG (NYSE: AIG) and China’s PICC Group (HKEx: 2328) has taken another tentative step forward with the finalization of a joint venture between the 2 companies. The move marks a symbolic one for AIG, reversing its global pullback of the last 5 years after it nearly collapsed at the height of the global financial crisis in 2008. Read Full Post…
Much of the world is watching China’s hunt for global resource M&A, which looks set to accelerate in 2012, but a completely different piece of news caught my eye this morning from leading oil producer PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR), which has just announced a new venture in the completely unrelated insurance sector. (company announcement) PetroChina made headlines earlier this week with the announcement that it was buying out its partner in a Canadian oil sands project, the latest in a recent string of global acquisitions for the company and its rivals as China looks to feed its hungry economy and make itself more energy self-sufficient. (English article) But the insurance announcement seems to have gone relatively unnoticed by many major media, even though it looks rather large to me with registered capital of nearly $1 billion. Perhaps people are unimpressed by the fact that PetroChina’s partner in the venture is its state-run parent, which will hold a controlling 51 percent stake, meaning this is really just a nominal joint venture since both partners are part of the same company. It’s also a bit disappointing to see that while the venture will sell insurance in many popular areas, such as health and property, one area that’s not on the list is the most lucrative life insurance sector, meaning industry leaders China Life (HKEx: 2628; Shanghai: 601628; NYSE: LFC), Ping An (HKEx: 2318; Shanghai: 601318) and New China Life (HKEx: 1336) may not need to worry about new competition anytime soon. While this move looks a bit strange on the surface, I find it quite intriguing and perhaps even intelligent as PetroChina looks for ways to diversify beyond its core oil exploration business, which is famously subject to huge price swings globally and strict price controls at home by Beijing. I suspect that formation of this joint venture is just the first step, and that we may soon see PetroChina try to bring in a more experienced partner from the financial services sector to help it run the venture by the end of this year. If it does take that route, the right combination of PetroChina’s deep pockets and a savvy financial services partner could make this new endeavor a serious competitor in the insurance space in the next 2-3 years.
Bottom line: PetroChina’s move into insurance looks like a smart diversification play if the company can find a good partner from the financial services sector to develop the business.
