Tencent-funded Waterdrop is preparing for an initial public offering, seeking a valuation of about $4bn as early as this year, several people familiar with the matter said today. The insurance technology start-up, backed by Tencent, is working with Bank of America and Goldman Sachs for a possible share sale, according to people familiar with the matter.
Currently, Waterdrop is still considering potential listing locations, with the U.S. as one option, but a final decision has not been made.
People familiar with the matter also said the IPO could take place as soon as this year. The four-year-old start-up plans to include its main business unit, Waterdrop Insurance Mall, Waterdrop Mutual and Water Drop Chips, in its listing plans, according to one person familiar with the matter.
Work is still at an early stage and details, including valuations and timetables, are still likely to change. In addition, more banks may join in the later stages.
In response to questions from Bloomberg, Tao Ran, a spokesman for Waterdrop, said Waterdrop “does nare sit until there is a clear IPO plan, but we will continue to explore opportunities in capital markets.” Representatives for both Bank of America and Goldman Decline d’Or declined to comment.
Analysts say the IPO will help Waterdrop raise money to fend off competition from Ant Group in China’s healthcare sector. At the same time, China’s demand for high-quality medical services is increasing.
According to the company’s website, Waterdrop has more than 250 million users on its payment platform. Boyu Capital, Meituan Dianping and IDG Capital Partners are their supporters. Waterdrop works with 28 insurance companies, including China’s largest. In the June 2019 Round C financing, Waterdrop raised about 1 billion yuan ($143 million).
Waterdrop Co. operates like a collective: people donate small amounts of money to help people diagnosed with critical illnesses, and in return they will be paid when they need them. Waterdrops said last year that they would charge an 8% commission. Ant Group’s mutual insurance, which attracts 106 million users, is one of the direct competitors to Waterdrop Mutual. (Li Ming)