Recent market volatility has made IPOs unattractive with some recent headline market entrants even dropping below their issue price. This situation has inspired investors to search for alternatives when they help startups to develop.
Online insurance company Singapore Life has just closed about $20 million Series B funding, of which $7.3 million comes from Hong Kong-based investment firm Ion Pacific with the remainder from existing investors.
But instead of an IPO, Michael Joseph, co-CEO of Ion Pacific, said that he expects to sell Singapore Life to a strategic player in the near future.
Singapore Life has already raised $83 million from US insurance company Aflac, Impact Capital and Aberdeen Standard Investments, according to statistics on Crunchbase. And by January this year, the startup was already valued at $200 million, according to Ion Pacific.
Founded in 2014, Singapore Life offers life insurance services via its online platform, and uses technology underwriting for instant approval. The startup acquired Zurich Life’s life assurance business in Singapore in late 2017 and is responsible for about $4.5 billion of coverage for clients acquired from Zurich.
“Insurance as a whole in Southeast Asia is growing by leaps and bounds over every other region,” said Joseph. “What makes something interesting from an M&A perspective is either differentiated intellectual property, differentiated user base, or differentiated footprint. And Singapore Life has all three.”
Joseph points out that Singapore Life could be a reasonable M&A target for a strategic buyer. It is not too expensive to frighten away potential investors which makes it a perfect buyout target. But thanks to a steadily growing market in the region, he is not looking to sell right now.
Hype has made Asian private equity investments expensive over the past year, even for sovereign wealth funds. This is especially so for unicorns when an overvalued listing usually leads to an adjustment after they go public. Shares of Xiaomi and Meituan, two Chinese unicorns that listed in Hong Kong last year, both dropped below their IPO prices right after listing.
This has made investors wonder whether there are alternative ways to help companies grow, while generating a sizable profit at the same time. In this case, a takeover by a large corporation would be a preferrable route for many startups in the region.