Looking to the future, Huize will focus on the insurance business and gradually develop overseas businesses through private equity investments, win-win cooperation, mergers and acquisitions.
When China's technological innovation transformation becomes a new strategy, it means that China is moving towards the high end of the global value chain with technology.
For Chinese companies, the term "going global" is not unfamiliar. This is the way for Chinese companies to seek opportunities and development in a broader overseas market. Similarly, with the continuous improvement of the technological content of Chinese enterprises, their influence in the world is gradually deepening, and extending the value chain overseas has become the inevitable way for various industries to open up the second growth curve.
When insurance technology going global and business going global become global development trends, Huize (HUIZ.US) will undoubtedly be one of the shining new stars.
The reason why it is called "new" is that Huize has not been going global for long. On February 12, 2020, with the sound of the Nasdaq gong, Huize officially landed on the US stock market, taking a crucial step towards internationalization, and then upgrading and building a global brand continuously in recent years. Today, with the expansion of the global "circle of friends," Huize's journey of going global has become more stable.
Poni Insurtech debuts on the international stage and lands in Vietnam for the first time
In the face of the huge demand and potential of the current overseas market, Huize, a technology insurance platform that has accumulated extremely rich experience in China, has actively laid out the overseas market in recent years, deepened and expanded international business, and its international brand Poni Insurtech, with the mission of building a pan-Asian digital insurance distribution platform, has emerged.
Smart Money APP has learned that as the major brand of Huize's overseas business development, Poni Insurtech has played the role of Huize's international development platform since its inception, mainly responsible for expanding the overseas map and insurance technology business, and Huize has thus opened the road to international expansion.
On June 20, 2024, Huize, one of the top digital insurance service platforms in China, announced the formal acquisition of Global Care Consulting Joint Stock Company (hereinafter referred to as "Global Care"), a pioneering insurance technology company in Vietnam focusing on the digital transformation of the insurance industry. The acquisition marks Huize's entry into its second international market, and its business further extends to potential development areas. This not only conforms to the international flow of funds and the trend of Chinese enterprises going global but also meets the group's future strategic planning and long-term layout.
It is understood that Global Care, established in 2017, is a leading insurance technology company in Vietnam, providing simplified and digital sales processes, policy management and operation solutions for insurance companies. Global Care's cloud API solutions and mobile applications provide a wide range of embedded and customized insurance products for a broad customer base, including leading e-commerce platforms such as Grab and Ahamove by connecting insurance companies with merchants and various distribution channels. In 2023, the Global Care platform facilitated 13.5 million policies, with revenue growing more than fourfold year-on-year and registered users growing more than 1.3 million.
Tan Guohao, Huize's chief financial officer and head of international business, said:"Vietnam is an attractive emerging insurance market, with a large young and highly digitalized population of 100 million, and a macroeconomic environment and foreign direct investment inflows that can drive strong GDP growth over the next decade. We are delighted to work with founder Niem and his experienced team through our strategic investment in Global Care to establish it as a pioneer in providing innovative digital insurance solutions to the insurance industry in Vietnam."
According to the transaction documents, Huize will complete the acquisition of the controlling equity of Global Care through its newly established international branch Poni Insurtech by buying existing shares and subscribing new shares in multiple installments. At the same time, VinaCapital Group, a leading investment management company in Vietnam with assets under management of $4 billion, will obtain new Class A common shares issued by Huize as part of the consideration through VinaCapital Ventures, its technology investment platform, which on a fully diluted basis, will represent 1.7% of the issued share capital, of which 50% of the shares will be subject to a one-year lock-up period. After completion of the transaction, Global Care will become a subsidiary of Huize, and its financial performance will be merged into Huize's financial statements.
From this, Huize has conveyed two key messages to the market: firstly, even though Poni Insurtech is relatively new, it has still won strategic investment from VinaCapital in this difficult financing environment, which can undoubtedly be regarded as a vote of confidence from the investment community in Huize's international expansion, and the entry of new strategic shareholders has greatly increased the "gold content" of the company and the success rate of its international market development.
Tan Guohao further pointed out, 'We are also very pleased to bring VinaCapital into huize as a strategic shareholder through this transaction. Based on VinaCapital's extensive resources and network in Vietnam, we are confident in further promoting cooperation opportunities in the local market.'
International investment banks and well-known institutions also show positive attitudes towards this acquisition. Dahua Jixian mentioned in the updated report of huize that huize announced its acquisition of Global Care, a leading insurance technology company in Vietnam, to enter the ASEAN market. Considering the low insurance penetration rate in Vietnam, the Vietnamese insurance market has huge growth potential. We are optimistic about this acquisition. We also expect the synergy between huize's technology and operational advantages and Global Care's extensive domestic network may bring significant competitive advantages to huize. Therefore, we maintain a 'Buy' rating for huize.
More importantly, taking Vietnam as an example, it can be seen that Chinese companies have more possibilities to participate in the digital and globalization process of Southeast Asian insurance industry. Huize keenly captures the development opportunities of this gold mine market. It is expected to occupy a more obvious competitive advantage in these markets by using its products and more advanced technology, which has been matured in the domestic market. In the future, it will also bring more incremental space and performance growth to huize.
Anchoring the blue ocean market in Southeast Asia, the growth ceiling is further opened.
In fact, this is not the first time that huize has faced the international market. In recent years, huize's multi-line forward-looking strategy in business scope, types of insurance, and customer quality has brought synergies and formed a strong growth engine. In terms of market expansion, while consolidating its core domestic market, the company has made bold attempts to open up overseas markets and achieved outstanding phased results.
For huize, the Hong Kong market is its 'debut' to explore the path of internationalization. As a leading player in the domestic insurance industry, huize has accumulated massive user demand data and expert experience. It can customize insurance products that better meet the needs of target customers and lead insurance companies to cooperate with its sales capabilities to push products to the market. This model has also been highly praised in mature markets like Hong Kong.
According to huize’s first-quarter report, the company provided closed-loop high-end insurance services and diversified asset allocation for high-potential users through the Hong Kong market. In the first quarter, the growth momentum of mainland customers visiting Hong Kong to allocate Hong Kong insurance continued, and the contribution of Hong Kong insurance business to total revenue increased to 7%. As a result, the average savings insurance for huize reached 69,000 yuan in the first year of premium, a year-on-year increase of 58.3%.
Huize has quickly established core capabilities in mature markets. Why did Poni Insurtech choose to land in Southeast Asia for its 'second dance'? In our opinion, there are three reasons:
First of all, Southeast Asia has similar market characteristics to China, including rapidly growing economic levels, huge and young populations, urbanized middle classes, and increasing demand for digital insurance solutions. Huize's successful digital insurance business model in its local market provides huge opportunities for huize to replicate in Vietnam, and huize's technological and cost advantages will help the company to go international quickly.
Secondly, there is a huge market space in Southeast Asian countries. According to Bain and Temasek's estimation, the CAGR of premium income in Southeast Asia from 2022 to 2025 is expected to reach 31.0%, with higher growth rates in countries with lower insurance depth and density, such as Indonesia, the Philippines, and Vietnam. With the growth of per capita disposable income and structural changes in young consumer groups, the insurance market in these regions has enormous potential. While exploring market opportunities in Southeast Asia, huize's revenue structure can also be further optimized and diversified.
From the details of this transaction, huize opened up the commercial path to Vietnam by creating value through investing in local insurance ecological partners, deeply participating in the local market's exhibition, and improving insurance availability. When huize can connect with a brand new localized scene in Vietnam and establish benchmark cases, the success rate of replication in other Southeast Asian countries will be higher.
Regarding this, Dahua Jixian also has a positive view on huize's landing and expansion in the Vietnamese market: huize replicates an effective business model in China. Considering the similarity of business models and value propositions of the two companies, this acquisition will produce significant synergies. Huize will use its technological capabilities and excellent operations in China to accelerate the development of new products for Global Care in Vietnam. In addition, huize has established existing partnership relations with leading global insurance companies such as AIA, Prudential, and Manulife, which are also major participants in the Vietnamese insurance market. This will also promote Global Care's market share growth.
Furthermore, Southeast Asian countries have very frequent communication and cooperation. Huize's successful business model provides replicable and promotable experience for the Southeast Asian insurance market. Additionally, it is expected to further enhance its popularity in Belt and Road Initiative countries and accelerate the results of the 'global strategy'.
Looking to the future, Huize will focus on its insurance business and gradually expand its overseas business through private equity investments, win-win partnerships, and mergers and acquisitions. On the other hand, it is expected to establish an international technology and innovation platform, focusing on health, retirement, and technology to support the development of its insurance business and further expand the accessibility of insurance for overseas consumers.
As Huize Holding CEO and Chairman Ma Cunjun said, in the future, Huize will grasp the continuously growing trend of the Chinese and Asian insurance industry, strengthen its product customization capabilities in all scenarios and differentiation, integrate online and offline sales and service capabilities. At the same time, it will continue to expand its business in the Hong Kong insurance market and actively explore the development opportunities in emerging markets in Southeast Asia to achieve the goal of double-digit international market revenue contribution rate by 2024.
It can be expected that in response to the demand of the global insurance market, Huize will continue to leverage its extensive market experience, its broad partnership network, and its strong insurance technology capabilities to continuously enhance the company's business value in different business scenarios.