Richard Li’s insurer FWD drops New York listing to sell shares in Hong Kong after a US$1.4 billion private placement with global investors

FWD Group, the Hong Kong-based insurer backed by tycoon Richard Li Tzar-kai, will drop its New York listing plan to sell shares on its hometown exchange, a source said. The firm was poised to raise more than US$1.4 billion in a private fundraising ahead of its revised flotation plan.

The insurer will raise the cash through a placement of new shares with a group of global investors including Apollo Global Management, the Canada Pension Plan Investment Board, the reinsurer Swiss Re, and the Siam Commercial Bank, FWD said in a statement on its website on Tuesday.

Other investors include Li’s Pacific Century Group, Metro Pacific Investments Corp and the Li Ka Shing Foundation, which is controlled by Li’s father. The private placement was expected to be completed this month, subject to certain closing conditions. The statement did not mention its US listing plan.

The insurer was aiming to raise up to US$3 billion in New York in September that would value the group at US$13 billion, people familiar said in August. The IPO plan hit a regulatory roadblock in October when it did not receive official approval after US regulators asked about potential risks associated with the Chinese government extending its authority over Hong Kong-based firms.

FWD will still drop its plan to list on the New York Stock Exchange even after it received a green light from the Securities and Exchanges Commission, the source said on Monday, adding that it is likely to list at home in the first half of 2022. FWD’s spokesperson declined to comment.

Hong Kong is being caught up in the crossfire amid rising geopolitical tensions between the US and China, giving the insurer cause for caution, the source said, citing Didi Global’s decision to delist from the US as an example.

The expected listing will boost the city’s status as a leading venue for global initial public offerings (IPOs). Hong Kong is set to end the year in fourth place this year with US$356 billion of proceeds, KPMG estimated, a 23 per cent slide from 2020 when it ranked second behind Nasdaq and the first decline since 2017.

Concerns about the status of Hong Kong as a global IPO venue were raised after SenseTime Group delayed its US$768 million IPO in the city on Monday after the US placed China’s largest artificial intelligence firm on an investment blacklist on human rights grounds.

Financial Secretary Paul Chan Mo-po, however, said Hong Kong remained one of the world’s leading fundraising hubs after taking the global IPO crown in seven of the past 12 years. IPO proceeds rose 27 per cent to HK$400 billion in 2020, and this year’s volume has exceeded HK$298 billion through November, he said in a written reply to enquiries from the Post.

Chan opposed the US government sanctions. “While the government will not comment on the details of individual listing applications, we strongly object to the so-called ‘sanction’ imposed against relevant personnel and parties, which was based on unfounded allegations and false information. Such action of the US has achieved nothing but caused damage to the interests of US investors,” he added.

The private share placement by FWD can support the growth of its business and reduce its leverage, FWD said.

For the nine months ended September, the value of new business grew 36 per cent year on year to US$511 million, while its earnings totalled US$131 million. The company turned around from a net loss of US$306 million during the same period last year, according to its US draft prospectus.

Additional reporting by Georgina Lee