China’s Huize targets SEA market with Vietnamese insurtech acquisition

Chinese insurtech corporation Huize is betting on its acquisition of Vietnam’s Global Care to capture the growing demand for digital insurance products in the rapidly urbanizing ASEAN region.

Founded in 2006 and headquartered in Shenzhen, Huize is a Chinese third-party insurance services platform that primarily targets mass affluent consumers. The Nasdaq-listed company announced the deal on June 20, noting that it is subject to customary Vietnamese M&A approval for foreign investment.

The transaction, conducted through its newly established international arm Poni Insurtech, will result in Poni Insurtech acquiring a controlling stake in Global Care.

Huize is headquartered in Shenzhen, China. / Photo credit: Huize

“We have witnessed in advanced economies that once per GDP capita breaks the US$5,000 mark, insurance penetration is expected to take off,” Ron Tam, Huize’s co chief financial officer and head of international, tells Tech in Asia.

Tam agrees that Vietnam’s fragmented insurtech market and consumer skepticism towards insurance products could be challenging but believes Global Care is the right local partner. He stated that there will be no downsizing; instead, the headcount is expected to increase following the integration of the two companies post-transaction.

In 2021, Global Care disclosed an investment from VinaCapital Ventures, which will receive about 1.7% of Huize’s newly issued class A common shares to become a strategic shareholder of Huize. Half of these shares will be subject to a one-year lock-up period.

Founded in 2017, the Vietnamese startup offers a platform that enables insurance companies and agents to sell policies through a cloud-based app. It claims to have facilitated 13.5 million policies and boasts 1.3 million registered users since its inception.

Vietnam is Huize’s second international market, following its entry into Hong Kong last year. The Chinese company plans to pursue M&A opportunities in markets such as Indonesia and the Philippines, with the potential addition of a new ASEAN market in the second half of 2024.

In the first quarter of this year, Huize reported US$43 million in operating revenue, a 3.8% increase from the previous year. Meanwhile, expenses declined by 21.5% to US$6.1 million during the same period.

Tam stated that the company aims for its international markets to contribute 10% of revenue by 2024, with an ambitious target of reaching 30% within three years.

See also: Are Asia’s insurtech players pouring new wine into old wineskins?