Cheche Technology, A Platform For Auto Insurance In China, To Be Publicly Listed Through A Merger With Prime Impact Acquisition I
Established in 2014, Cheche Technology has pioneered digitizing and empowering the insurance ecosystem to transform industry performance and consumer experience in China through its national transaction platform and SaaS offerings.
Cheche Technology's primary focus lies in the P&C insurance market in China, in which auto insurance is the largest, high-growth sector with an estimated RMB 1.1 trillion (approximately $159.5 billion) of total auto insurance premiums by 2026[1].
Cheche Technology expects its unaudited annual revenue for the year ended December 31, 2022 to be approximately RMB 2.5 billion (approximately $360 million).
The proposed transaction represents a pre-money equity value of $760 million for Cheche Technology and an implied pro forma enterprise value of approximately $841 million for the combined company.
Cheche Technology Inc. ("Cheche Technology"), China's leading auto insurance technology platform, and Prime Impact Acquisition I ("Prime Impact") (NYSE:PIAI), a publicly traded special purpose acquisition company, today announced that they have entered into a definitive business combination agreement (the "Business Combination Agreement") that will result in Cheche Technology becoming a publicly listed company (the "Proposed Transaction"). Upon closing, the combined company (the "Combined Company") will be listed on Nasdaq under the new ticker symbol CCG. The Combined Company will continue to be led by Lei Zhang, Founder and Chief Executive Officer of Cheche Technology, and other key executive leadership members.
Cheche Technology has created a unique ecosystem with powerful, self-reinforcing network effects. As of June 30, 2022, Cheche Technology had facilitated a broad range of auto insurance transactions covering over 4,000 vehicle makes with approximately 100 insurance carriers, 400 third-party platforms, and 820,000 referral partners in its ecosystem.
Cheche Technology has scaled its business with a technology-driven, capital-efficient approach and facilitated the issuance of insurance policies with gross written premiums of RMB 11.1 billion (approximately $1.6 billion) in 2021, with estimated growth of 36.3% to RMB 15.2 billion (approximately $2.2 billion) in 20222. Cheche Technology's track record of strong growth has been largely organic and highly efficient from a marketing standpoint, with a substantial amount of business generated through word-of-mouth referrals and local industry relationships. Cheche Technology expects its unaudited annual revenue for the year ended December 31, 2022 to be approximately RMB 2.5 billion (approximately $360 million).
Cheche Technology has leveraged its technology capabilities, extensive data sets and understanding of China's insurance industry to develop and launch two cloud-based SaaS solutions for insurance carriers and intermediaries: Sky Frontier and Digital Surge. Digital Surge is an intelligent one-stop SaaS product that helps insurance intermediaries enhance operating efficiency and meet evolving regulatory requirements. Sky Frontier is an AI-based, SaaS analytics engine that helps insurance carriers optimize underwriting and pricing strategies based on market data and proprietary insights. Through its unique SaaS offerings, Cheche Technology is well-positioned to capture significant opportunities resulting from the accelerating digitalization of the auto insurance market in China.
Management Commentary
Dixon R. Doll, Co-Founder, GP Emeritus, DCM, Director of Prime Impact
"Based on my many years of successfully investing in Chinese technology companies, I am very supportive of the transaction with Cheche Technology. I believe in the Prime Impact team's ability to support Cheche Technology's entry into the public markets and their ability to continuing growing and innovating in the Chinese insurance sector."
Mark Long, Co-Founder, Co-CEO and CFO of Prime Impact
"We are very excited to be working with Lei and his excellent team at Cheche Technology in their next chapter of growth and innovation. We have great respect for the platform that Lei and his technical team have built and the trusted relationships they have developed throughout the industry over the last eight years. We appreciate Lei's strategy of leveraging their extensive insurance transaction platform to provide scalable SaaS and AI-enable analytic solutions to key stakeholders in the insurance ecosystem. We believe the Cheche Technology transaction platform and suite of SaaS solutions can deliver improvements in efficiency, pricing and risk management and create significant value for their partners, customers and stakeholders."
Lei Zhang, Founder and CEO of Cheche Technology
"It is our great pleasure to have found Mark and the Prime Impact team last year. We have since engaged in deep discussions on the growth and development trajectories our company should take and believe the seasoned, resourceful Prime Impact team can help us get to the next levels. With extensive experience in capital markets, mergers and acquisitions, particularly with a focus on data and technology centric businesses as well as a profound understanding of the Asian markets, Mark and his colleagues check all of the boxes of the great partners we have been looking for on a long-term basis. 2023 has just begun and will be an important year for us, and we can't wait to get to work to deliver to our customers better products and services that we are constantly enhancing and refining to add to the greater good of the industry, where we hope to continue to evolve and lead."
Transaction Overview
The Proposed Transaction values the Combined Company at an implied pro forma enterprise value of approximately $841 million, at a price of $10.00 per share, assuming no further redemptions by Prime Impact shareholders. The Proposed Transaction is expected to result in gross proceeds of approximately $68 million to Cheche Technology (assuming no further redemptions by Prime Impact shareholders), and the potential for additional financing. Upon closing, Cheche Technology's shareholders will retain a majority of the outstanding shares of the Combined Company and Cheche Technology will designate a majority of proposed directors for the Combined Company board.
Cheche Technology expects to use proceeds from the Proposed Transaction to accelerate technology development and new market entry while also continuing to invest in growth across existing markets.
The board of directors of both Cheche Technology and Prime Impact have unanimously approved the Proposed Transaction, which is expected to be completed in the third quarter of 2023, subject to, among other things, approval by the shareholders of Prime Impact and Cheche Technology, and satisfaction (or waiver, as applicable) of the conditions stated in the Business Combination Agreement, including regulatory approvals and other customary closing conditions, including a registration statement on Form F-4 (the "Registration Statement") to be filed by the Combined Company being declared effective by the SEC, and the listing application of the Combined Company being approved by the Nasdaq Stock Market LLC.
Additional information about the Proposed Transaction, including a copy of the Business Combination Agreement and an investor presentation, will be provided in a Current Report on Form 8-K to be filed by Prime Impact with the SEC and available at https://www.sec.gov/.