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On September 18, local time, domestic insurance technology company Cheche Technology and SPAC company Prime Impact Acquisition (PIAI) completed their merger and were officially listed on Nasdaq in the United States. On the first day of listing, Cheche Technology, which opened at US$11, closed at US$75, an increase of 581.82%, corresponding to a market value of nearly US$6 billion.
According to the merger agreement, the combined company will sell 1.8 million shares to investors at a price of $10 per share, plus other gains of $4.1 million. The Cheche Technology account is expected to generate $22.1 million in earnings.
Cheche Technology is the first VIE structured company approved by the China Securities Regulatory Commission to list in the United States since the implementation of the "Administrative Measures for the Overseas Issuance and Listing of Securities by Domestic Enterprises" and the first De-SPAC listing project. The listing of Cheche Technology is of great significance and has excited the VC/PE circle.
Premiums are 16.6 billion,
The largest third-party digital auto insurance manufacturer in China
Cheche Technology was founded in 2014 and is headquartered in Beijing. It has 130 branches in 28 provinces and cities across the country and is the largest third-party digital auto insurance trading platform in China. Cheche Technology is the fourth largest insurance technology company in China based on gross premiums in 2021.
As of the first half of 2022, Cheche Technology's digital auto insurance covers 4,000 car models and has been designed for hundreds of insurance companies and 400 third-party platforms.
In 2021 and 2022, Cheche Technology's gross premiums will be 11.1 billion yuan and 16.6 billion yuan respectively, and the number of policies in the two years will be 7.8 million and 12.3 million respectively. In the past two years, Cheche Technology's net income was 1.74 billion yuan and 2.68 billion yuan respectively, and the corresponding net losses were 150 million yuan and 90 million yuan respectively.
The degree of digitization of social life continues to increase, and digital auto insurance has entered thousands of households. As the earliest market participant, Cheche Technology has tasted the dividends of the industry. Data from iResearch shows that the domestic digital auto insurance trading industry has grown from 85 billion yuan in 2018 to 270 billion yuan in 2021, with an average annual compound growth rate of 47%.
However, the domestic auto market is becoming increasingly saturated, and in the long run, the growth rate of digital auto insurance will gradually slow down.
Open up the transaction link,
Create a one-stop platform for digital auto insurance
Zhang Lei, the founder of Cheche Technology, graduated from Beijing Institute of Technology and worked for Huawei for five years. In 2009, after leaving his job, Zhang Lei returned to Beijing for development, serving as CEO of Cloud Power Technology and getting involved in the digitalization of insurance. After five years of development, Cloud Power Technology has developed into one of the largest digital insurance technology companies in China, undertaking the digital transformation of multiple insurance companies.
In 2014, Zhang Lei decided to enter the insurance transaction link and joined several old colleagues from Yunli Technology to establish Cheche Technology. At the beginning of its business, Cheche Technology was determined to become the largest Internet auto insurance trading platform in China, connecting insurance companies on one end and auto insurance users on the other, opening up the digital auto insurance transaction link and realizing a one-stop service for auto insurance from quotation, underwriting, payment, and outsourcing.
In 2015, Cheche Auto Insurance APP was launched. After that, Cheche Technology adopted an open platform strategy to provide auto insurance interfaces and operation services for major websites, quickly opening up the digital insurance trading market.
In 2018, Cheche Technology acquired the insurance intermediary Panhua Insurance and obtained a national insurance intermediary license. With the license from Fanhua, Cheche Technology has built a nationwide network and entered the county market, transforming into a new insurance retail company. In 2021, Cheche Technology launched the Pengpai Insurance SaaS product for insurance intermediaries to promote the digital transformation of insurance intermediaries.
After years of development, Cheche Technology has built a unified digital insurance cloud platform, forming a closed business loop covering insurance companies, third-party platforms, insurance intermediaries, and auto insurance users.
Digital transformation of insurance giants,
Third-party platforms are being squeezed
Driven by the competent authorities, the domestic auto insurance market has undergone two rounds of comprehensive reforms, and the independent pricing coefficient of commercial auto insurance has further expanded, creating a Matthew effect in which the strong get stronger. In 2022, the auto insurance premium income of the top three auto insurance companies PICC Property & Casualty Insurance, Ping An Property & Casualty Insurance, and China Pacific Insurance Property & Casualty Insurance will reach 271.2 billion yuan, 201.3 billion yuan, and 98 billion yuan respectively, with growth rates of 6.2%, 6.6%, and 6.7% respectively.
While the top three auto insurance companies are expanding their market share, many small and medium-sized insurance companies are withdrawing from or shrinking their auto insurance business due to increasing losses. In the long run, changes in the auto insurance market will undoubtedly have an impact on third-party insurance trading platforms such as Cheche Technology.
More importantly, the development of financial technology is in the ascendant, and insurance giants are also scrambling to achieve digital transformation, each forming their own ecological closed loop to directly cater to insurance users.
For example, Ping An Insurance established an insurance technology company in 2008, built a big data middle platform in 2012, and started building basic AI capabilities in 2014, completing a three-level leap in informatization, automation, and digital intelligence. The entire operation process of Ping An Property & Casualty, from auto insurance sales, underwriting and issuance, daily services, to auto insurance claims and policy renewals, is divided into more than 300 subdivided processes, of which 90% of process nodes are online.
The digital transformation of insurance giants will undoubtedly have a squeezing effect on third-party digital insurance platforms.
The industry rectification has come to an end.
Fintech is ushering in a wave of listings
As the first VIE structure company to be listed in the United States after the new overseas listing regulations, the listing of Cheche Technology caused a sensation in the VC/PE circle. In 2020, the listing of Ant Group on the Science and Technology Innovation Board was suspended, triggering industry rectification, and the listing of financial technology companies was temporarily suspended.
Industry insiders pointed out that after the industry rectification comes to an end, as financial digitalization continues to deepen, the listing window for financial technology companies is approaching.
After 2022, the three major Chinese concept stocks, OneConnect, Qifu Technology, and Lufax Holdings, have successively landed on the Hong Kong Stock Exchange and achieved secondary listings. Since 2023, more than a dozen financial technology companies have submitted prospectuses or updated their listing progress. Among them, Bangsheng Technology is the first financial technology company to submit a prospectus to the Science and Technology Innovation Board after 2021.
In addition to Cheche Technology, Chengxin Technology and Fendan Technology both plan to be listed on NASDAQ in the United States.
On the other hand, due to changes in the regulatory environment in China and the United States, overseas listings of companies with VIE structures are also at a standstill. Cheche Technology's road to listing in the United States marks that VIE companies are back on track for overseas listings. This is undoubtedly a major benefit for U.S. dollar funds that are struggling to exit.
Text: Bugle-X / Data Ape
