Ping An's OneConnect Lifts Off in Diminished New York IPO
Backed by SoftBank and SBI Group, the Chinese fintech platform raised $312 million in its offering, much less than anticipated.
Ping An Insurance's OneConnect Financial Technology Co. Ltd. (NYSE: OCFT) became the second Chinese company to become publicly traded this week in a downsized initial public offering totaling $312 million.
The stock in OneConnect, which provides tech solutions in the financial sector, opened at $10.51 per American depositary share and were trading at $10.28 before noon, up nearly 3%. The company sold 31.2 million ADSs at $10 each.
Earlier, the company, backed by Japan's SoftBank and SBI Group, targeted to raise up to $504 million in what could be one of the largest China IPOs this year. Just before its IPO, OneConnect cut the offering from 36 million ADSs and lowered the expected price range to $9 to $10 per share, down from the expected $12 to $14.
That places OneConnect's value at about half its $7.5 billion valuation last year, as reported by Reuters.
Securing the offering are Morgan Stanley & Co. LLC, Goldman Sachs (Asia) LLC, J.P. Morgan Securities LLC, Ping An of China Securities (Hong Kong) Co. Ltd, BofA Securities Inc. and HSBC Securities (USA) Inc. The underwriters may purchase up to an additional 4.7 million ADSs to cover over-allotments.
"Four years ago, we started for a dream to make use of technology to make finance easier." Jessica Tan the co-chief executive officer and chief operating officer of Ping An Group, said at the bell ringing ceremony, as quoted on Twitter.
A subsidiary of Ping An Group, OneConnect's principal shareholder, acquired 1 million ADSs in the IPO, according to the filing with the U.S. Securities and Exchange Commission on Friday.
In its prospectus, OneConnect said it intends to use the proceeds of its IPO to enhance its technology, for overseas expansion, to boost its sales and marketing for customer acquisition and for general corporate purposes.
Citing data from market analyst Oliver Wyman, OneConnect said in its filings that China's financial services industry is expected to grow at a compound annual growth rate (CAGR) of 12% from 2018 to 2023. The industry generated $2 trillion in revenue last year, according to the report.
Based in Shenzhen, OneConnect is one of the largest technology service platforms in China in terms of customers, according to a separate report from Oliver Wyman, as cited in the company's prospectus. As of September, it reported serving more than 3,700 customers, which includes China's major banks and insurance companies.
For the nine months through September, OneConnect said its revenue reached $217.5 million, up 72% year-over-year. Net loss widened to $146.8 million, or 16 cents per share, compared with $84.4 million, or 9 cents per share, a year ago.
(Co-authored by Anthony Russo and Anna Vodopyanova)