Richard Li-controlled insurer FWD refiles Hong Kong IPO application

IPO proceeds will be used to support growth, enhancement of digital capabilities and strategy, firm says in prospectus
Insurer shelved plan to list in New York in 2021 amid ongoing US-China tensions

IPO

Martin Choi

Published: 8:15pm, 13 Mar 2023

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FWD Group Holdings, the Hong Kong-based insurer backed by tycoon Richard Li Tzar-kai, on Monday afternoon refiled its application to list on the city’s stock exchange, having postponed its planned listing in May last year due to ongoing market volatility.

Proceeds from the initial public offering (IPO) will be used to “support growth” and the “enhancement of our digital capabilities and strategy”, FWD said in its prospectus.

The insurer shelved its plan to list in New York in 2021 amid ongoing US-China tensions that deteriorated to their lowest level in decades. It had aimed to raise up to US$3 billion in New York in September 2021, which would have valued the entire company at US$13 billion.

FWD has not disclosed how much it aims to raise from the Hong Kong IPO, but Bloomberg reported that the deal size could now be trimmed to US$1 billion.

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It usually takes at least six months for a new issuer to obtain all the approvals and clearances from Hong Kong’s exchange before an IPO can kick off. CMB International, Goldman Sachs, JPMorgan and Morgan Stanley are helping the company with the planned stock offering.

Meanwhile, the underlying value of FWD’s new business increased to US$806 million last year, growing at an annual average rate of 24 per cent from US$524 million in 2020, according to its prospectus.

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FWD’s total revenue, however, fell to US$8.25 billion last year, from US$11.7 billion in 2021, according to its prospectus. It reported a net loss of US$740 million in 2022 compared with a net profit of US$249 million in 2021, mainly due to losses on investment returns as a result of adverse capital market movements.

It reported an 83 per cent increase in its 2022 segmental adjusted operating profit before tax, which reached US$334 million.

The insurer said last month it had raised a total of US$1.83 billion in private placements in 2021 and 2022 to support its growth plan. The investors involved included Apollo Global Management, Canadian Pension Plan Investment Board, Li Ka Shing Foundation and Swiss Re, according to a statement on February 28.

Also last month, FWD announced plans to buy a majority stake in Malaysian insurance provider Gibraltar BSN Life, which would allow it to tap into the Southeast Asian market’s growth potential ahead of its planned IPO. FWD, along with a group of investors, will buy a 70 per cent stake in Gibraltar from a subsidiary of New York-listed Prudential Financial, according to a statement on February 20.

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Founded in 2013, FWD is the insurance arm of Pacific Century Group, Li’s investment group. The company offers life and medical insurance, general insurance and employee benefits.

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