China’s Ping An Good Doctor files for $1b Hong Kong IPO

Hong Kong skyscrapers. Photo: Reuters

By Shiwen Yap

February 1, 2018

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.

Recently, its competitor, the Singapore Exchange (SGX), announced plans to introduce dual-class share structures in order to attract technology listings on the city-state’s bourse.

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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