Swiss Re-Backed FWD Raises $1.4 Billion, Weighs Hong Kong IPO

December 14, 2021 by

Billionaire Richard Li’s FWD Group Ltd. raised more than $1.4 billion in private placements with investors including an insurer backed by Apollo Global Management Inc.

The investors include Apollo’s Athene Holding Ltd., Canada Pension Plan Investment Board, Siam Commercial Bank Pcl and Swiss Re, according to a statement confirming an earlier Bloomberg News report. The proceeds will help FWD boost growth and reduce leverage, the statement showed.

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The funding comes as the Asian insurer prepares for a potential Hong Kong initial public offering after its U.S. listing plan stalled, according to people familiar with the matter.

FWD is switching its focus to list in Hong Kong as early as next year, after plans for a potential U.S. listing hit a snag amid regulators’ increasing unease over the long arm of the Chinese government, the people said, asking not to be identified as the information is private.

Recent market volatility and feedback from investors also factored into the decision, the people said. While FWD had secured approval from the U.S. Securities and Exchange Commission to begin marketing the IPO to investors, the company decided to switch its venue to Hong Kong, they said. The U.S. listing could have raised as much as $3 billion, Bloomberg News has reported.

The company would reach a valuation after the placements of about $9 billion, which would imply about 1.2 to 1.3 times embedded value, the people said. The figure is broadly in line with how much FWD would have been valued at if it had listed in the U.S., after accounting for factors such as the private placement discount, market volatility and the exclusion of any IPO proceeds, the people said. FWD was considering a U.S. listing that would have valued the company at about $13 billion, people familiar with the matter have said.

The funds raised in the private placements will cut debt, which had ballooned after years of acquisitions across Southeast Asia, clearing the path for the Hong Kong IPO to be mainly about funding growth, they added.

Other investors in the funding round include the Li family’s Li Ka Shing Foundation, Metro Pacific Investments Corp. and Richard Li’s investment firm Pacific Century Group, the statement showed.

A representative for FWD Group declined to comment.

The value of the insurer’s new business climbed 45% in the first half of 2021 from a year earlier. In the third-quarter, the same figure — a key metric of profitability — grew year over year by more than 20%, according to its SEC filings.

Earlier this year, FWD and Apollo’s Athene agreed on a deal in which Athene and Apollo will also manage part of FWD’s investment portfolio as part of a strategic partnership with an initial term of five years.

Shifting the company’s IPO to Hong Kong would follow the path of Chinese ride-hailing giant Didi Global Inc., which earlier this month decided to list in Hong Kong and to delist from the U.S. just five months after going public. The drastic move highlights how perilous betting on Chinese equities remains more than a year into Xi Jinping’s campaign to remake the country’s tech sector, along with much else, in Asia’s largest economy.

–With assistance from Michael Hytha.

Photograph: A person takes a photograph of the city’s skyline on a viewing terrace at Victoria Peak in Hong Kong, China, on Wednesday, May, 26, 2021. Photo credit: Paul Yeung/Bloomberg.

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