Tencent-Backed Insurance Platform Waterdrop Targets US$360 Million US Listing
Waterdrop, the online insurance and medical crowdfunding platform backed by Tencent, has started marketing its initial public offering (IPO) of up to US$360 million on the New York Stock Exchange.

The Beijing-based firm is selling 30 million American depositary shares (ADS) in a range of US$10 to US$12 each, according to a term sheet seen by the Post. Each ADS represents 10 ordinary shares.

Waterdrop has an option to sell up to 4.5 million more shares if there is strong demand. Joint book-runners on the deal include Goldman Sachs, Morgan Stanley and Bank of America.

Founded in 2016 by 33-year old Shen Peng, a former executive at China’s food-delivery to ticket- booking platform Meituan, Waterdrop represents one of the latest Chinese firms to list offshore.

Waterdrop has secured indications of interest from both existing and new investors, which together seek to buy at least US$210 million worth of ADS, or about 63.6 per cent of the global offering. They include affiliates of Chinese private equity firms Boyu Capital and Hopu Investments. Tencent owns about 22.1 per cent of the firm and will be diluted during the listing.

Shen Peng, founder of online insurance and medical crowdfunding platform Waterdrop. Source: Weibo alt=Shen Peng, founder of online insurance and medical crowdfunding platform Waterdrop. Source: Weibo

Waterdrop claims to be the largest independent third-party life and health insurance distribution platform in China, having served some 79.4 million consumers as of the end of last year, according to its US filing.

The loss-making company, which has 19.2 million paying customers, said it works with 62 insurance firms and offers 200 products on its platform. It primarily generates brokerage income from selling insurance policies underwritten by the insurers.

Over the past three years, its net losses widened to 663.9 million yuan (US$102.5 million) in 2020 from 209.2 million in 2018. Apart from an insurance marketplace, it also runs a crowdfunding platform, through which it acquires users and converts them into paying customers. It claims its crowdfunding platform supported some 1.7 million patients who raised about 37 billion yuan from donors as of the end of last year.

In China, the health care expenditure gap that is not covered by social or commercial medical insurance was estimated at 4.7 trillion yuan in 2019, underlying significant unmet medical protection demand in China, according to iResearch.

Total premiums of the Chinese life and health insurance market will climb to 6.1 trillion yuan by 2024, soaring from 3.3 trillion yuan in 2020. Third-party insurance brokers and agents will likely account for 13 per cent of the market by 2024, up from just 3 per cent in 2020, according to iResearch.

Waterdrop plans to use the net proceeds from its IPO on expanding its operations as well as on research and development.

Source: Yahoo Finance

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