Ping An’s Voyager brings good health to PE

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By:
Chris Wright
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The fund is deploying $1 billion of the Chinese group’s money into digital medicine and fintech around the world, but profit is not its main ambition.

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Jonathan Larsen, Ping An


In the increasingly crowded field of home-grown Chinese private equity and venture capital, one member of the throng is doing its own thing. Ping An Global Voyager is a $1 billion fund whose number-one priority is not its returns. 

“I’m not going to be a very popular fellow if we don’t deliver a reasonable return on Ping An and [founder] Peter Ma’s dollars,” says Jonathan Larsen, chairman and chief executive of the fund and chief innovation officer across the whole Ping An group. “But financial return is not the primary criteria. The objective is much more than that.”

Instead, Larsen says, the objective is “a way of extending Ping An’s access to capabilities.” 

It is principally about buying its way into emerging innovation outside China and bringing that expertise back for the group to assimilate and build upon. 

“We do a lot of internal R&D, but there is an enormous amount of innovation going on, in fintech and digital health in particular,” he says. 

Those two fields are the priority of the fund, which launched last year with $1 billion to deploy.  


Getting China to a world-class health system is going to be very expensive, given the scale of the country 
 - Jonathan Larsen, Ping An

Getting to grips with the opportunity is not easy – Larsen estimates 7,500 players each in financial technology and in digital health – but at the time Euromoney speaks with him, at the IMF annual meeting in Bali in October, the fund has put $100 million to work. 

“And if a few things go well, we have line of sight to another $100 million,” he says, bringing it to $200 million deployed by the end of the year, its first full year of operation. “That’s roughly in the scale we were hoping to achieve.”

Within those two fields, there are a few commonplace approaches. Investee companies need to be “in that very interesting sweet spot of someone who can add strategic value to us and vice versa, incremental to stuff we could have done ourselves anyway and where the intrinsics of the investment proposition are attractive,” says Larsen.

They tend to be mid-stage and early growth-stage startups, three to five years in, where “they’ve done their initial pivot, they’ve done whatever management adjustments they need to do, there’s adult supervision in the room and they have a product, platform and revenue stream so we can see what we’re getting.

“The art of the thing is finding those companies.”

So far, three companies have been publicly confirmed as having met the grade and received investment. It is quite telling that two of them are on the healthcare side, despite Ping An’s reputation as an integrated financial services company. Indeed, Larsen spends much more of the interview talking about healthcare innovations than he does fintech. 

Group health

Before meeting Euromoney, Larsen has been onstage at the Institute of International Finance annual meeting, sitting next to DBS chief executive Piyush Gupta (who said, incidentally, that Ping An was “one of the three companies I’m most scared of”, the other two being Ant Financial and Tencent). Larsen said onstage that healthcare could be as big for Ping An as financial services.

It is such a big statement that Euromoney seeks clarification: did he mean for his fund or at the group level? 

“The group,” he says. 

China, he points out, spends about $500 a head on health; in the US it is $10,000. 

“You don’t need to go to the US level and you probably don’t want to,” he says, but in countries such as Australia, Germany, the UK and the Netherlands, the average tends to be between $2,500 and $4,500. 

“Getting China to a world-class health system is going to be very expensive, given the scale of the country,” he says.

But China does want such a system and recognizes that in order to get there quickly and at scale, technology is going to be a very important part of the answer; hence Larsen’s focus.

One of the companies the fund has invested in is an Israeli firm called MeMed, a pioneer in blood work. This company has designed a diagnostic test that indicates the difference between a virus and a bacterial infection, which, as people should know, is also an indicator of whether or not antibiotics can be considered. 

Today, doctors trying to establish which of the two it is commonly use a white blood cell-count test, which Larsen says is wrong 40% of the time. The MeMed system, he says, is 93% accurate, using a proprietary technology based on a pinprick of blood, which, when applied to a disposable cartridge and plugged into a machine on a doctor’s desk, gives the right answer within 15 minutes.

“In emerging markets, there are serious concerns – from the WTO and China’s government, among others – about the consequences of the overuse of antibiotics,” says Larsen. 

These consequences include wastage, damage to resistance levels and the fact that it diverts antibiotics from those who really need them. This technology, therefore, is potentially highly important. 

Another investment not yet closed is in a company that analyses a photo of the fundus of the eye (the part opposite the pupil, containing the retina and optic disc) and, using that, can diagnose 30 disease types, with a 98% accuracy rate on diabetic retinopathy, for example.  


He should not fear us. I think we can work together on a lot of things 
 - Jonathan Larsen

Once acquired, the technology can be rolled out internally and, in particular, can be meshed with the Good Doctor website service Ping An already owns, through which 1,000 directly employed doctors and 4,650 external doctors offer online medical diagnoses, then refer clients to clinics Ping An has accredited. 

The Good Doctor unit was spun off in a $1.12 billion IPO in Hong Kong in May; its cornerstones include BlackRock, GIC and the Canada Pension Plan Investment Board. 

The other healthcare deal made public so far, is an investment in Tyto Care, also from Israel (and the US). This company specializes in remote diagnostics: a digital stethoscope, an algorithm that analyzes breathing and heartbeat patterns, and a camera that can look in the throat and ear. 

“They essentially get you to 95% of the in-clinic patient experience for a majority of medical consultations,” Larsen says. “That’s a massive complement to the Good Doctor platform, which, as of last disclosure, has about 232 million registered users and has emerged as the largest tele-medicine platform in China, and indeed the world.” The two are already combined.

Larsen came to Ping An from Citi, where he was global head of retail banking and mortgages and, earlier in his career, regional head of Asia-Pacific consumer and country head for Singapore. 

It is fair to assume that this must have been a steep learning curve for him; yet he speaks about medical diagnostics as though he has a PhD. 

He says he is assisted greatly by the group’s appointment of a chief medical officer Marco Huesch, who has been a practising doctor, medical consultant and was most recently vice-chair of research and associate professor at Penn State Hershey Medical Center. 

The group also has access to McKinsey’s health practice.

“But for me personally, yes, it has been an incredible learning experience,” he says. “One of the major attractions of doing this job, mid-career, was to do something completely orthogonal to running businesses, which I’d been doing at Citi on a large scale.” 

Part of the appeal was “to understand this unique Chinese organization, work with a world-class entrepreneur like Peter Ma and then to be able to restart my education in these two domains of innovation,” he says.

He is not the only one – another key hire was Larsen’s former Citi colleague Don Lacey, a managing director in the corporate and investment banking division, who, Larsen says, “had been involved in every significant insurance deal at any level [in Asia] in the last seven or eight years.”

One can see why China can make some clear wins in bringing medical expertise back home from overseas. But what about fintech, isn’t China already the world leader in that regard? 

China finance

It is hard to compete with what Ant Financial and Tencent have achieved on digital payments, or indeed with what Ping An’s own Lufax has done in peer-to-peer lending and broader digital wealth management. What does finance in China still need?

By way of answer, Larsen talks about 10X Future Technologies, in which the fund invested earlier this year. This is the company Antony Jenkins set up after he left Barclays. 

“Antony’s idea was that looking at legacy technology in banks, it’s a huge hindrance,” says Larsen. The two had some background in common, Jenkins having spent a lot of time in credit cards and consumer retail. “We both formed the view that tech had, for the most part, been an inhibitor rather than an enabler, and that organizations faced an enormous challenge in overhauling legacy infrastructure.

“His view was that if you took a clean sheet of paper, you would build the tech to serve a bank in a completely different way.”

Ping An was a leader in this respect. It was one of the first financial institutions to move completely to the cloud, a move since followed by DBS. 

“But we are not necessarily at the vanguard of how we would architect our bank for the future,” he says. “The 10X model is helpful to us both as a template and potentially a component of our infrastructure.”

10X works as an investment in its own right. It has completed the first phase of its platform build and its first client was Virgin Money in the UK, which uses the technology in its digital bank. 

“So we are quite optimistic about that business, but the point here is that 10X has a forward-looking approach that is additive to us,” says Larsen.

Other technologies under consideration include advances in natural language processing and chatbots, and a system that can take conversations at a call centre, turn them all into text so they can be machine processable and then apply the advances of big data to them so that more can be learned about client behaviour. 

And should DBS be scared of Ping An? Larsen plays it down, pointing out the modest presence DBS has in China, and saying that Gupta is among the best tech people in banking. 

“He should not fear us,” says Larsen. “I think we can work together on a lot of things.

“It’s more about partnership than competition.”