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Tencent-backed Waterdrop weighs IPO at US$4b value

[BEIJING] Waterdrop is preparing for an initial public offering as soon as this year, seeking a valuation of about US$4 billion, according to people familiar with the matter.

The insurance tech startup, backed by Tencent Holdings, is working with Bank of America and Goldman Sachs Group on the potential share sale, the people said. The US is among potential listing venues that the Beijing-based firm is exploring and no final decision has been made, the people said.

An offering could happen as soon as this year, according to the people, requesting not to be named because the matter is private.

The four-year-old startup, which focuses on health care crowdfunding, plans to include its major business units Waterdrop Insurance Mall, Waterdrop Mutual and Waterdrop Crowdfunding in the proposed listing, one of the people said.

Considerations are at early stage and details including valuation and timeline could still change, the people said. More banks could join at a later stage, they added.

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Waterdrop "doesn't have a clear IPO plan yet, but it will continue to explore all kinds of opportunities in the capital market," its spokesperson Tao Ran said in response to a Bloomberg News query. Representatives for Bank of America and Goldman Sachs declined to comment.

A share sale could help Waterdrop raise funds to fend off competition from Ant Group in the Chinese healthcare space. It would also come amid growing demand for quality medical services in the world's most populous nation, which is rapidly greying and has to grapple with soaring rates of critical illnesses.

Waterdrop counts more than 250 million users on its pay platform, according to its website. Boyu Capital, Meituan Dianping and IDG Capital Partners are among its backers. The startup, which works with 28 insurance companies including the largest in China, raised about US$143 million in a series C funding round in June 2019.

Its platform Water Mutual operates somewhat like a collective: People chip in small amounts of money to help those diagnosed with critical illness, and in return receive payouts when they are in need. The company said last year it takes a commission of 8 per cent.

Ant's Xiang Hu Bao, which has attracted 106 million users, is one of Water Mutual's direct competitors.

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