Ping An Healthcare & Technology, which operates the healthcare-focused mobile app Ping An Good Doctor in China, has filed a prospectus to conduct an initial public offering (IPO) in Hong Kong.
Citigroup Global Markets Asia and JP Morgan Securities (Far East) are the joint sponsors of the IPO. While the firm has not disclosed the IPO size or pricing, it was reported in November 2017 that it was working with Citigroup and JPMorgan on an IPO of up to $1 billion.
In October 2017, Softbank Vision Fund had acquired a 7.41 per cent stake in the business for $400 million, valuing the company at an estimated $5.39 billion. Another major backer of the firm is Vision Fund Singapore SPV, which holds a 7.41 per cent equity interest in the firm.
The firm is China’s largest healthcare and online medical platform by the number of users. Despite significant losses over the last two years and concerns over profitability, the Hong Kong Exchange (HKEx) has accepted its listing on the bourse.
Ping An Healthcare provides diagnosis and online appointment booking, enabling patients to connect with healthcare professionals using digital media such as video and photos. It also maintains a database of healthcare articles, in addition to supporting a microblog discussion forum where users share their experiences.
Despite revenue growing 240.4 per cent from a year earlier to RMB 1.02 billion (US$129.5 billion) in the nine months ended 2017, it posted losses of RMB 497.4 million for the period. This follows a net loss of RMB 614.2 million in the first nine months of 2016.
In its application for listing, Ping An Healthcare said: “We are in the early stages of development with a limited operating history in an emerging and dynamic industry, and our historical results and financial performance are not indicative of future performance.”
Currently, Ping An Healthcare’s issued share capital is split into class A-shares, which account for 77.2 per cent of the shares, and the remainder, 22.8 per cent, being class B-shares. Its public float in Hong Kong will see the ordinary shares consolidated into a single category.
IPO proceeds will be used for business expansion, potential acquisitions and development of AI Assistant and other technologies. Currently, the firm’s network coverage includes 3,100 hospitals and 7,500 pharmacy outlets.
Research by US consulting firm Frost & Sullivan predicts China’s internet healthcare market to grow to RMB 197.8 billion ($31.4 billion) by 2026 from RMB 10.9 billion ($1.73 billion) in 2016.
The public float comes as Hong Kong has played host to a large number of technology stocks that saw strong first-day gains, boosting its reputation as a technology listings destination. Chinese internet businesses such as ZhongAn Online P&C Insurance and China Literature have debuted on the HKEx to strong investor demand – particularly from retail investors – with both offerings being heavily oversubscribed.
However, some entrepreneurs in the region, such as PropertyGuru’s co-founder Steve Melhuish, have argued that a listing on the HKEx makes sense only if the company has a strong China market orientation. Melhuish highlighted that while Hong Kong was good in terms of valuations and liquidity, companies often needed a North Asia or China angle to sustain long-term investor appetite – a factor that Ping An Good Doctor need not be concerned about.
HKEx is expected to allow weighted voting rights for technology firms from June 2018 in order to attract more new economy companies to list on the bourse. While such dual-class shares favour founders and specific shareholders, there are concerns that such a structure can be abused by corporate insiders.