Chinese Insurer Waterdrop Plans US IPO After $230M Funding Round

In a bid to grow its health insurance division and go public, Waterdrop Inc., a Hong Kong-based insurer, has raised $230 million in a funding round, Reuters reported.

The fundraising comes ahead of the 4-year-old startup’s initial public offering (IPO) plan in the U.S., sources told the news service.

With the new cash, Waterdrop said it will accelerate its initiatives in healthcare services and invest in artificial intelligence (AI) and big data for its products and services.

The round was led by Swiss Reinsurance, or Swiss Re, a reinsurance company based in Zurich, Switzerland, and Tencent Holdings, a global conglomerate holding company based in Shenzhen, China.

Waterdrop’s existing investors included IDG Capital, a Beijing, China, investment and asset management firm that specializes in venture capital, and Wisdom Choice Global Fund, an arm of WisdomTree Investments in New York.

Sources familiar with the transaction told Reuters that Waterdrop was valued at almost $2 billion in the funding round. Swiss Re had invested $100 million.

Swiss Re declined to comment to Reuters but said the company’s participation in the round was part of its long-term commitment to China.

Last week, Sofya Pogreb, chief operating officer of Next Insurance, told PTMNTS the impact of the pandemic has been devastating on small businesses.

“It became immediately apparent to us how hard-hit our customer base was by the pandemic,” she said.

The Palo Alto, California, company offers policies to small businesses from general contractors to personal trainers. Pogreb said insurance firms have been hit with their own challenges during the pandemic, impacting everything from coverage options to the claims payouts.

The industry now has an opportunity to embrace market disruption in ways that can strengthen customer relations and put capital into the hands of business owners who need it quickly and painlessly, Pogreb told PYMNTS.

Chinese companies are racing to launch U.S. IPOs before proposed rules take effect that would expose the companies’ audits to scrutiny by American regulators.

The potential value of the IPOs pushed forward quickly after President Donald Trump recently pitched the new rules. Among the IPOs cited are Chinese real estate company KE Holdings, which filed its U.S. IPO July 24. Also in the mix is Xpeng, a producer of electric automobiles.