OneConnect Gives Details for its IPO Valued at $468M

OneConnect Financial Technology which is the artificial intelligence and blockchain arm of Ping An Insurance that is easily one of the largest insurance firms in China has come forth with the terms for its IPO valued at $468 Million. Sources indicate that based on the F-1 Filing of its prospectus with the United States Securities and Exchange Commission (SEC), the firm intends to conduct the initial public offering which is aimed at raising between $432 million and $504 million via issuing about 36 million American Depositary Shares (ADS) at around $12- $14 per share.

The filing puts the Chinese at the helm when blockchain technology is the buzzword in the fintech space at the moment. The filing reads:

“China’s financial services industry had RMB334.9 trillion (US$46.9 trillion) of total assets as of December 31, 2018, and generated RMB14.1 trillion (US$2.0 trillion) of revenue in 2018”.

Financial institutions that have chosen to underwrite the initial public offering include Goldman Sachs, HSBC, Bank of America, Morgan Stanley and JPMorgan.

This, of course, puts paid to the rumors that the original amount to be raised was $100 million which was changed in the November filing of the prospectus. Sources further indicate that OneConnect is considering listing on the New York Stok Exchange (NYSE) using the symbol “OCFT”. The filing further pegs the valuation of the company to be between $4.7 billion – $4.9 billion. This value, of course, is a reasonable reduction in the $7.5 billion which was the valuation that Softbank depended on during the last fundraising.

With inflows of $222 million and about $160 million in losses so far this year, it seems that the guys at OneConnect seem to have it all planned out and may just hit and even surpass the figure.

OneConnect had at one point tried to get listed on the Hong Kong stock exchange with a target deal worth about $1 billion. But due to liquidity issues, they had to shelve the idea and now they have settled for less but with inclusion into the United States financial space which is carefully guarded by the United States government. 

Artificial Intelligence and blockchain technology have several uses within the insurance industry. The propensity for many policyholders who see insurance companies like cash cows due to the increased fraudulent activities that go down within such circles. Anyone can lie and cheat using current legacy systems for the creation of insurance products but when it comes to open ledger systems and artificial intelligence, the propensity for the success of such crimes decreases sharply. 

The use of data and analytics models for the creation of other types of digital products as per insurance also gets a big boost as well. From the prospectus, it seems that China is holding the fort when it comes to fintech companies going in the direction of innovation but we all now the Americans: They show up at just the right time. This time, it is only time that shall tell.