Richard Li's FWD Group Seeks US IPO - And Says China Rules Do Not Apply

The life insurer operates in Southeast Asia and says China's regulatory crackdown does not apply to its operations - for now.
Sep. 27, 2021 18:12
Richard Li's FWD Group Seeks US IPO - And Says China Rules Do Not Apply

(CapitalWatch, Sept. 27, New York) FWD Group Holdings Ltd., a Pan-Asian life insurer controlled by Hong Kong tycoon Richard Li, has filed for a New York initial public offering.

Founded in 2013, FWD Group sells life insurance in ten growing markets, including Thailand (and Cambodia), Japan, the Philippines, Indonesia, Singapore, Vietnam, Malaysia, and Hong Kong. It operates via a digital-driven, multi-channel distribution model, branching out through a bancassurance franchise and placing the customer at the center of its strategy, it wrote in its filing with the U.S. SEC.

As of June, the company counted 9.9 million customers in a market that will transfer $425 billion in gross written premiums (GWP) this year, according to research by N.M.G. Financial Services Consulting cited in the prospectus. In 2020, FWD Group recorded $9.5 billion in revenue and $252 million in losses. In the half-year through June, the insurer booked $6 billion in revenues, up 54% year-over-year, and turned up a net profit of $205 million.

The company entered $100 million as the placeholder IPO amount; however, the size of the offering will likely be substantially larger. In its prospectus, filed Thursday, FWD Group said several key investors have signed up to acquire up to $500 million in the offering. These include $300 million from the Li Ka Shing Foundation, $100 million from PCCW Ltd. (OTC: PCWLF; HKEX: 0008), and $100 million from PCGI Holdings Ltd.

Richard Li is the son of the notable billionaire Li Ka Shing; he owns PCGI Holdings, FWD Group's controlling shareholder, and also holds a stake in PCCW, a Hong Kong IT and telecoms company. The board of directors at FWD Group lists some big names, including John Baird, a former Senior Cabinet Minister of Canada who played a role in the Canada-China dialogue and in building ties with ASEAN countries.

Concurrently with the IPO, FWD Group will raise an additional $400 million in a private placement of shares at the issuance price to Athene Life Re Ltd., a Bermuda-based reinsurance company. Athene's parent company is a retirement services provider Athene Holding Ltd. (NYSE: ATH), whose assets are managed by a New York global investment manager Apollo Global Management Inc. (NYSE: APO). According to the prospectus, Apollo has agreed to a lock-up period of a year on $50 million and two years on $350 million worth of shares.

FWD Group has attracted a number of big banks to its listing, which shows continued strong interest for top Asian businesses even amid the regulatory uncertainty. The securers of the IPO are Morgan Stanley & Co. LLC, Goldman Sachs (Asia) LLC, J.P. Morgan Securities LLC, HSBC Securities (USA) Inc., and CMB International Capital Ltd. Also participating are SMBC Nikko Securities America Inc. and CCB International Capital Ltd.

FWD Group's IPO filing is a rare occurrence on Wall Street these months after China's regulatory crackdown on overseas listings. Indeed, FWD Group noted specifically that it does not have "any substantive operations in mainland China" and "the laws and regulations of the PRC do not currently have any material impact on our business, financial condition and results of operations."

However, the company goes on to say that should PRC laws and regulations become applicable to its business, that "may have a material adverse impact on our business, financial condition and results of operations and our ability to offer or continue to offer securities to investors, any of which may cause the value of our securities, including the ADSs, to significantly decline or become worthless."

FWD Group hopes to become publicly traded on the New York Stock Exchange, under the symbol "FWD."