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IPO

Hong Kong tycoon Richard Li's insurance arm gears up for $3bn IPO

FWD releases prospectus for U.S. share offering

Insurer FWD has filed for an IPO in the U.S. (Source photos by Getty Images)

HONG KONG -- Billionaire Richard Li's insurance business FWD is gearing up for an up to $3 billion initial public offering in the U.S. this year.

The acquisitive insurer, which released its share-offering prospectus in early Asian hours on Friday, plans to complete the offering in the fourth quarter, two people familiar with the plans said. The fundraising could range between $2 billion and $3 billion, they said. The company had filed confidentially with the Securities and Exchange Commission in June.

FWD, which has acquired businesses in Hong Kong, Indonesia, Vietnam and Thailand in recent years, said in the filing that Athene Life Re, which is managed by private equity firm Apollo Global Management, plans to take $400 million worth of shares in a concurrent private placement.

Athene and Apollo will also manage part of FWD's investment portfolio for at least five years, the prospectus says. FWD also revealed IPO commitments of $300 million from the Li Ka Shing Foundation, a charity founded by Li's father; $100 million from PCCW, a Hong Kong-based telecom operator backed by Li; and $100 million from Li's holding company PCGI Holdings.

FWD picked the U.S. market instead of Hong Kong because it allows dual-class share structures, which would allow Li to retain voting control, a person familiar with the matter had previously said. Hong Kong's listing rules only allow weighted voting rights for innovative companies, an exception that FWD, as an insurer, does not qualify for, they said.

The holding company PCGI, which focuses on technology, media and telecom, financial services, and property, is the largest shareholder as of now, with a 72.7% stake.

Another of Li's investment vehicles holds a little over 11%, while Swiss Re and a company controlled by Hopu Investment Management Chairman Fang Fenglei hold a similar amount, according to the prospectus.

FWD plans to use the proceeds to retire debt, fund acquisitions and for working capital.

The company last year completed the acquisition of two Metlife units in Hong Kong, Vietcombank-Cardif Life Insurance in Vietnam and PT Commonwealth Life in Indonesia. In 2019, it agreed to pay about $3 billion for the life insurance operations of Thailand's Siam Commercial Bank.

FWD posted a net profit of $205 million on revenue of $6 billion in the first six months of 2021, according to the filing. That compared with a net loss of $318 million on revenue of $3.9 billion during the same period last year. The value of new business, an important measure of profitability, rose 47.5% during the period to $346 million, it says.

The company, which was started in 2013, operates in 10 markets and serves 10 million customers, said total assets surged to $62.5 billion as of June 30 compared with $51.3 billion at the end of 2019.

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