SoftBank’s Vision Fund is backing Chinese online insurance giant ZhongAn through its latest investment, which could take the company — which has struggled for stability following a monster IPO last year — into international markets.
The Vision Fund announced today it has made an undisclosed investment in ZhongAn International, the global arm of the five-year-old company created by $200 billion insurance giant Ping An and internet firms Tencent and Alibaba. The ZongAn business is widely-heralded as China’s first digital insurance company. Its insurance products cover lifestyle, consumer finance, health, travel and automotive, and it went public last September in a Hong Kong IPO that raised $1.5 billion. ZhongAn International was created in December of last year to scout out overseas opportunities.
Despite impressive credentials and a trailblazing business, it hasn’t been smooth sailing.
Disappointing financial results — which center around hefty fees paid to online platforms that give it distribution — have seen the value of ZhongAn shares nosedive. The current price of HKD35.55 is down on the HK$59.70 IPO price, and a far cry from a peak HKD 93.65 back in October.
Aside from adding the support of a major name — SoftBank’s Vision Fund is easily the largest tech investment firm in the world, with a $90 billion-plus purse — this investment might give cause for optimism. Alongside the investment, ZongAn International is creating a new entity in partnership with SoftBank that will be dedicated to “exploring international opportunities.”
More specifically, SoftBank plans to use ZongAn’s technology and its network to expand to “multiple markets” in Asia, although it isn’t specific about which countries or a timeframe for the potential launches.
“We are pleased to announce this partnership which will allow us to explore new and innovative ways to serve more companies and customers outside of China. SoftBank is an important business partner and we believe this collaboration will significantly boost our technology solutions businesses,” said ZhongAn Online CEO Jeffrey Chen in a statement.
The deal, and joint entity, signifies a growing trend of SoftBank becoming operationally involved in investments with companies that are looking at overseas growth opportunities.
SoftBank inked a joint-venture with Chinese ride-hailing giant Didi Chuxing to launch a taxi-booking service in Japan. While it has also announced a JV to bring Indian payment service Paytm to Japan. Both companies are long-term investments for SoftBank, but SoftBank believes its experience and network can help them navigate international waters. The same thinking applies to the ZhongAn deal although it appears that the partnership is shooting for more than just Japan.
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Author: Jon Russell
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