NEWS WRAP: Fanhua details plan to go global, expand into high-tech healthcare

The Chinese insurance broker said it will use $500 million from a Singaporean investor to move beyond its home market through two medical-related acquisitions

By Teri Yu

Fanhua Inc. (FANH.US) will use up to $500 million in new investment from Singapore’s White Group on acquisitions to boost its telehealth and medical robot capabilities as it diversifies beyond its core Chinese insurance brokerage business, the company said on Tuesday.

Fanhua and White Group signed a framework agreement for the investment of up to $500 million earlier this month. White Group also pledged to invest up to $500 million in Fanhua’s majority-owned asset management company Puyi Inc. (PUYI.US). Such investment would be a major boost to both companies, which each had market values below $400 million at that time.

Fanhua’s stock rose nearly 15% on Tuesday after the latest announcement, but gave back most of that the next day. The latest announcement didn’t contain details on the $500 million investment for Puyi, whose stock was largely unmoved.

The latest announcement said White Group will inject assets to drive Fanhua’s development in artificial intelligence (AI) and set up presences in Singapore, Vietnam, Europe, the U.S. and Hong Kong. It added the pair will also explore potential investments in two assets.

One of those is an Asia-based telehealth solutions provider with a network of 2,000 doctors, 600 clinics and over 1 million users across Asia, making it one of the region’s largest providers. The other is a maker of medical-grade AI humanoid robots for use in medical research and home and elderly care, with development facilities in several countries.

The announcement didn’t state what White Group would receive in exchange for its investment. But it will presumably receive a large stake in Fanhua, since White Group’s founder and executive chairman Peh Chin Hua will become Fanhua’s chairman with immediate effect, the announcement said.

Fanhua co-founder Hu Yinan and chief strategy officer Ben Lin (林创斌) will step down as co-chairmen. Hu will assume the position of vice chairman and CEO, while Lin will continue as a director and in his current executive role.

White Group is a boutique investment firm founded in 2005 focused primarily on AI-related investments across different countries. Company founder Peh was a former member of the Singaporean parliament for 13 years.

Peh’s remarks and investment plans indicate White Group wants to help Fanhua expand beyond its home China market, where growth has slowed sharply in the last two years and financial services providers continue to come under close government scrutiny.

“We have full confidence that Fanhua can transform itself as a global leader in its pioneering innovation partnerships,” he said.

Fanhua made a few acquisitions in the past year in its attempt to re-ignite growth, but has yet to find big success. Thus, its new alliance looks like a play to diversify from its current domestic-focused insurance brokerage business to become a flagship for White Group’s ambition to become an AI-driven technology company.

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