Chinese insurer Ping An Group is combining profit and growth potential in venture capital investments through a designated fund.
The latest example was announced Monday (September 16) with an investment in Joonko, a new digital financial portal with an initial focus on insurance technology (insurtech). The portal operates via finleap, a European fintech ecosystem in which Ping An has also invested.
Both of these investments were made through Ping An Global Voyager Fund (GVF), a Hong Kong-based $1 billion global investment vehicle focused on growth stage insurtech, fintech and healthtech ventures. The fund typically invests between $15 million and $50 million in businesses where an affiliation with Ping An is likely to create significant mutual value over time.
“As a general matter, we tend to favour enabling technologies that allow traditional financial services companies to make use of new technology, as opposed to pure B2C businesses,” Jonathan Larsen, chief innovation officer of Ping An Group, and chairman and CEO of the Ping An Global Voyager Fund, told FinanceAsia.
Prior to the Joonko investment, the fund had invested roughly $250 million across fintech, healthtech, and artificial intelligence companies in Europe, North America, China and Israel.
Joonko is a digital financial portal that helps European consumers choose the right financial products for their personal saving and protection needs. The portal will be launched at the end of the year with car insurance as its first product.
According to Ping An, GVF invested in finleap last year and has had significant involvement in developing Joonko’s strategy and technology capabilities.
Larsen explained that GVF invests in companies where Ping An sees an opportunity to add some value over time. That can include becoming an anchor customer of a product, initiating a distribution relationship inside China, or deploying our own technology to help a company grow more quickly.
“That sort of a strategy, we believe, will result in attractive financial returns as well as useful strategic benefits to the group,” Larsen said. “One tangible example of this philosophy in action is our investment in Joonko. In addition to investing capital in Joonko, we have deployed a team of data science professionals from Ping An’s OneConnect business to streamline Joonko customers’ user experience,” he added.
The financial services firm OneConnect, another Ping An subsidiary, was granted a virtual banking licence to operate in Hong Kong by the Hong Kong Monetary Authority in May this year.
Another example of a recent investment from GVF is the $72.5 million funding round for H2O.ai that Ping An co-led with Goldman Sachs and announced in August. According to Larsen, H2O.ai has developed a so-called “driverless AI” platform that empowers non-data scientists to make use of new machine learning and data science tools to improve business performance. The company counts numerous insurance clients among its customers, including Ping An.
As private equity start-ups seek venture capital from investors, they start with seed funding or angel investor funding at the outset. Next, these funding rounds can be followed by Series A, B, and C funding rounds, as well as additional efforts to earn capital as well, if appropriate.
Larsen explained that GVF is primarily a growth stage venture investor. The fund does not often invest in very early stage companies. Instead, it focuses primarily on Series C level businesses.
“The reason for this is that we feel that slightly later stage businesses are more likely to have the institutional heft to interact productively with Ping An Group. Our investment amount can range from $15 million to $50 million. We are not control investors.” Larsen said.
While Ping An is venturing into potential VC investments through GVF, the group is also adapting its investment strategy in other areas. Ping An Insurance’s allocation to non-standard debt has slipped significantly, highlighting the growing challenges faced by China's insurers as they look to improve returns and lengthen duration amid a dearth of suitable assets.
Ping An’s co-chief investment officer said in July that the insurer’s overseas division is likely to shift its investment plans, lowering a dominant private assets investment approach at the same time as it ramps up its overall size.