Chinese online insurer ZhongAn jumps 18 percent in HK debut

World
Europe

Shares in ZhongAn Online Property & Casualty Insurance Company surged 18 percent in their trading debut on Thursday in Hong Kong as investors jostled for a piece of the 1.5 billion US dollar initial public offering (IPO), the biggest ever by a financial technology firm in Asia.

The stock jumped to as high as 70.50 Hong Kong dollars in early morning trade, compared with the 59.70 Hong Kong dollars IPO price. The benchmark Hang Seng index was down 0.2 percent.

ZhongAn priced the 199.3 million new shares on offer at the top of the IPO’s marketing range of 53.70 Hong Kong dollars to 59.70 Hong Kong dollars per share.

VCG Photo

The first-day gain coupled with a strong appetite for the deal bodes well for expected listings from other Chinese fintech giants in Hong Kong, including Alibaba affiliate Ant Financial and peer-to-peer lending and wealth management platform Lufax.

Both Ant Financial and Lufax are considering IPOs in Hong Kong, sources previously told Reuters, although the timing of the deals is uncertain.

Demand from retail investors - who have a significant influence over first-day trading in Hong Kong - accounted for 393 times the number of shares on offer in the IPO, ZhongAn said in a securities filing on Wednesday.

Typically, companies going public set aside 10 percent of the shares on offer for retail investors, with the remainder going to institutional buyers, but that volume goes up depending on the level of oversubscription.

In the case of ZhongAn, it originally allocated 5 percent of the shares to retail investors but underwriters ended up having to raise that to 20 percent because of strong demand, meaning fewer shares were available for professional buyers.

The institutional tranche was "significantly" oversubscribed, ZhongAn said.

CMB International, Credit Suisse, JPMorgan Securities and UBS acted as joint sponsors of the IPO, with China International Capital Corp Ltd (CICC), ICBC International, Morgan Stanley and six other firms also helping to underwrite the deal.

The banks stand to jointly earn up to 37.5 million dollars in fees, equivalent to a 2.5 percent underwriting commission, according to the IPO prospectus.

1969km

Source(s): Reuters