Richard Li’s FWD seeks New York listing in the biggest US stock offering by a Hong Kong insurer

The IPO values FWD at about US$13 billion, and the firm could raise up to US$2.5 billion, source says
Listing could be the biggest US flotation by an insurer based in China and Hong Kong since China Life Insurance raised US$3.5 billion on the NYSE in 2003

Banking & finance

Georgina LeeandPeggy Sito

Published: 1:34pm, 17 Jun 2021

Why you can trust SCMP

FWD Group, the Hong Kong-based insurer backed by tycoon Richard Li Tzar-kai, has applied for an initial public offer (IPO) in the US.

PCGI Intermediate Holdings, its holding company, said on Thursday that it had made a confidential filing with the US Securities and Exchange Commission for the IPO. Rumours of a listing by the insurer have been circulating in the market for two years now.

“The IPO is expected to take place after the SEC completes its review process, subject to market and other conditions,” PCGI said in a press release.

FWD chose the US over Hong Kong because “the US equities market was the largest and the most liquid in the world”, according to a person familiar with the matter. Detailed terms – the number of American depositary receipts it was selling or the price range of these shares – were still unknown, they said. But the insurer, whose business spans 10 markets in Asia including Japan, was targeting raising US$2 billion to US$2.5 billion, the person familiar said. FWD declined to comment on the fundraising size.

If the IPO goes ahead as planned, FWD’s listing will be the biggest US flotation by a Hong Kong-based insurer, Refinitiv data shows. It will also be the largest IPO by an insurer headquartered in China and Hong Kong since China Life Insurance raised US$3.5 billion on the New York Stock Exchange in December 2003, the Refinitiv data shows. The IPO values FWD at about US$13 billion, the person familiar said.

FWD is the insurance arm of Richard Li Tzar-kai’s sprawling investment group. Photo: Getty Images

FWD is the insurance arm of Pacific Century Group, Richard Li’s sprawling investment group. Li is the younger son of tycoon Li Ka-shing. The insurer had 9.8 million customers, 6,100 employees and US$62.6 billion in assets as of December last year, according to a fact sheet posted on its website.

The insurer has been expanding aggressively in Asia through acquisitions and a US IPO could provide FWD with more capital as it looks to strike more deals and acquire more licences that will enhance its distribution and scale in markets. For example, it is waiting for China to approve its application for a majority-owned insurance company on the mainland.

In June last year, it bought a minority stake in the life insurance arm of PT Bank Rakyat Indonesia (BRI). It had bid for a 30 per cent stake for about US$300 million, according to a person familiar with the deal.

02:40

How Li Ka-shing became Hong Kong's richest man

“We are now in all the major markets that we aimed to build in,” Huynh Thanh Phong, FWD’s CEO, told the Post last year. “The BRI Life acquisition fits exactly into the same approach and strategy that we’ve adopted over the years,” he added.

FWD is now present in Hong Kong, Thailand, Indonesia, the Philippines, Singapore, Vietnam, Japan and Malaysia.

In July last year, it completed the acquisition of the Hong Kong business of New York-headquartered MetLife. FWD did not disclose the transaction amount, but the price tag was reported at less than US$400 million by local media. In July 2019, it bought SCB Life Assurance, the life insurance business of Thailand’s Siam Commercial Bank, for 92.7 billion baht (or US$3 billion at the time), in what was the largest insurance deal in Southeast Asia in terms of value.

Other acquisitions made by FWD as it gradually built up its footprint in Asia include the acquisition of an 80 per cent stake in PT Commonwealth Life, the Indonesian life insurance arm of Commonwealth Bank of Australia, for US$301 million in October 2018. In 2016, the company spent US$21 million to take over Shenton Insurance in Singapore, US$36 million on Great Eastern Life in Vietnam and US$3 million on American International Group’s Japan insurance arm, Fuji Life.

FWD was itself born out of a takeover deal. In 2012, Li bought the Hong Kong, Macau and Thailand insurance businesses of Dutch financial services company ING for US$2.1 billion. The insurer was renamed as FWD.

Pacific Century Group also includes Hong Kong telecoms group PCCW and Pacific Century Premium Developments, which develops property in Hong Kong and Asia.

Post