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Ping An’s OneConnect aiming to raise $500 million in IPO

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Today, OneConnect the blockchain and AI spin-off from China’s Ping An will launch a U.S. initial public offering (IPO) for about $500 million, according to a Reuters report. The figure is significantly lower than the previously anticipated $1 billion offering size. Last month, the company made a preliminary registration with the SEC for a $100 million IPO.

Yesterday an updated SEC filing was published showing the maximum amount as $579.6 million, but $504 million ignoring underwriter options.

The figure is also less than last year’s Series A round in which OneConnect raised between $650 million and $750 million at a reported valuation of $7.5 billion, with Japan’s SoftBank and SBI Holdings as the lead investors. According to our calculations, the post money valuation will now be between $4.45 billion and $5.19 billion.

Specifically, the company is issuing 36 million American Depositary Shares (ADS) on the New York Stock Exchange (NYSE). Each ADS represents three OneConnect shares and the ADS price range is $12 to $14. The issuance represents 9.7% of the totals shares outstanding after the IPO. Additionally, the underwriters have an option to purchase a further 5.4 million ADSs.

OneConnect was initially eyeing a Hong Kong IPO, but a combination of a higher anticipated price and unstable political scenario made OneConnect change the listing venue to New York.

The SEC filing outlined the corporate structure of the company. At the top, OneConnect Financial Technology is incorporated in the Caymans. The Chinese mainland activities are owned by Hong Kong companies which are in turn subsidiaries of organisations domiciled in the Caribbean.

According to the IPO prospectus, the startup had revenues of $198 million in 2018, which increased to $218 million during the first three quarters of 2019. However, the company made a loss of $111 million in 2018, which widened to $126 million in the nine months ending September.

OneConnect terms itself as an AI company, but has several other technologies it offers to the financial services industry. The company boasts of a strong client base, which includes the majority of China’s major banks, 99% of its city commercial banks, and 46% of insurance companies. The total number of customers stood at 3,700 as of September.

A few months ago, OneConnect and parent company PingAn published a whitepaper on blockchain trade, stressing the need for interoperable blockchains. The company recently launched the SME-focused blockchain lending platform SeekCap that it developed with UBX, unit of UnionBank of the Philippines.

Last month, OneConnect conducted a proof of value workshop to demonstrate blockchain benefits for Thailand’s National Digital Trade Platform (NDTP).

The IPO is being underwritten by several banks, including Morgan Stanley, Goldman Sachs (Asia), JP Morgan, Ping An Securities, BofA Securities and HSBC. Reuters said OneConnect’s shares would start trading on December 13.