Richard Li-backed FWD insurance group publicly files for US IPO

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FWD Group, the Hong Kong-based insurer backed by tycoon Richard Li Tzar-kai, has made public its plans for a US initial public offering, which is expected to raise as much as US$3 billion.

The new filing overnight with the US securities watchdog did not disclose the number of American depositary shares (ADS) to be sold as it seeks to list on the New York Stock Exchange and FWD said in a press release that the offer price range has not yet been determined.

As reported by the Post, the insurer previously made a confidential draft registration with the US Securities and Exchange Commission in June. The IPO is expected to raise between US$2 billion and US$3 billion, according to people familiar with the matter.

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In its filing on Thursday, FWD also disclosed that Athene Life Re, a Bermuda reinsurer affiliated with Apollo Global Management, had agreed to purchase US$400 million of its shares as part of a private placement. The insurer also agreed to a strategic partnership with Apollo and Athene, in which Apollo will manage part of its investment portfolio. The partnership will have an initial term of five years.

Other investors have indicated interest in subscribing to up to US$500 million of shares in the offering, according to the prospectus.

That includes up to US$300 million by the Li Ka Shing Foundation, up to US$100 million from Hong Kong telecommunications company PCCW and up to US$100 million by PCGI Holdings, its controlling shareholder and one of Li’s holding companies. Li is the younger son of Hong Kong’s richest man Li Ka-shing.

Ahead of the IPO, PCGI holds a 72.7 per cent stake in the company, while Swiss Re Principal Investments Company Asia and Fornax Investment Global Company each own about an 11 per cent stake.

FWD’s listing would be the biggest US flotation by a Hong Kong-based insurer. It would also be the largest US listing by an insurer based in China or Hong Kong since China Life Insurance raised US$3.5 billion from its IPO in December 2003.

Founded in 2013, FWD is the insurance arm of Pacific Century Group, Li’s sprawling investment group. The company offers life and medical insurance, general insurance and employee benefits, growing from three markets initially to 10 markets in Asia today. Southeast Asia contributed more than 40 per cent of the value of its new business last year, according to the prospectus.

FWD reported a profit of US$128 million in the first half of 2021, compared with a loss of US$267 million from the first six months of 2020, according to the prospectus. It has lost money on an annual basis for the past three years.

The insurer reported revenue of US$6.02 billion in the first six months of 2021, compared with US$3.94 billion in the prior-year period.

It had 9.8 million customers, 6,100 employees and US$62.6 billion in assets as of December.

Morgan Stanley, Goldman Sachs, JPMorgan, HSBC Securities (USA) and CMB International Capital are the joint underwriters and joint bookrunners of the deal.

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