TOKYO -- OneConnect Financial Technology, Ping An Insurance's newly listed fintech arm, said it will continue to expand in Asia despite a lukewarm U.S. initial public offering last week.
The company on Thursday officially announced a Japanese joint venture with local financial services conglomerate SBI Holdings, aiming to offer cloud- and AI-based software to regional banks that support operations like marketing and risk management.
"We have the world-leading technology," OneConnect Chairman and CEO Wangchun Ye said in an interview with the Nikkei Asian Review in Tokyo. "We have a proven impact in China: We help banks increase the number of customers, increase their competitiveness, help them reduce costs and reduce risks. We hope we can help Japanese financial institutions achieve the same thing."
Spun off as the fintech arm of Ping An in 2015, OneConnect said it serves all major banks and almost half of insurers in China. It began expanding overseas last year, opening a subsidiary in Singapore and rolling out services across Southeast Asia.
"Currently [overseas revenue] is less than 5% of our total revenue," Ye said. "Over the next several years we hope we can double the contribution to 10-15%."
OneConnect went public in New York last week, raising $312 million for a valuation of about $3.7 billion, less than half of what it achieved when it raised funds last year from investors including SBI and the SoftBank Vision Fund. On Wednesday, its American Depository Shares were trading slightly lower than the offering price of $10.
The downsizing of the offering was seen by some analysts as a sign of falling investor appetite for loss-making startups after U.S. office sharing company WeWork canceled its IPO in September. But Ye defended OneConnect's business model.
"Investors were receptive of our business model. It was a difficult process, but we were able to secure funding," he said. "We hope to increase transparency and independence, and boost confidence among our clients. We are also laying the foundations for overseas expansion."
Ye also said that while OneConnect operates independently, it continues to enjoy a "special relationship" with Ping An, China's largest insurer by market capitalization. Ping An remains a major shareholder after the IPO.
For the nine months ended September, OneConnect's revenue grew 72% from a year earlier to 1.5 billion yuan ($217 million), while net losses rose 81% to 1.8 billion yuan. Ye did not specify a timeline for achieving profitability.
"The reason we are still loss-making is because we make investments in research and development, and because overseas expansion is still in investment stage," he said. "We believe these investments are very critical for long-term development."
SBI, a major online brokerage, has been investing aggressively in fintech startups across the world. It recently bought minority stakes in Japan's regional banks as part of an ambitious plan to create a tech-driven "fourth megabank" in Japan.
Yoshitaka Kitao, president of SBI Holdings and a former SoftBank executive, said the joint venture with OneConnect will be "key to [Japan's] regional revitalization."
SBI owns 60% of the joint venture, SBI OneConnect Japan. The company will be run by Hayato Koeda, former President of the Japanese unit of U.S. electronic document company DocuSign.