Billionaire Richard Li's FWD to raise US$1.4b, weighs Hong Kong IPO: sources

FWD would reportedly reach a valuation after the round of about US$9 billion. ST PHOTO: KUA CHEE SIONG

HONG KONG (BLOOMBERG) - Billionaire Richard Li's FWD Group is nearing a deal to raise more than US$1.4 billion (S$1.9 billion) in a private placement as the Asian insurer prepares for a potential Hong Kong initial public offering (IPO) after its United States listing plan stalled, according to sources familiar with the matter.

New investors backing the company include Apollo Global Management and Canada Pension Plan Investment Board, the sources said, asking not to be identified because the matter is private. Some existing shareholders including Swiss Re also participated in the round, which is likely to be announced as early as Tuesday (Dec 14), the sources said.

The company would reach a valuation after the round of about US$9 billion, which would imply about 1.2 to 1.3 times embedded value, the people said.

The proceeds would help FWD boost growth and substantially reduce its debt, which had ballooned after years of acquisitions across South-east Asia, the people said. New investors are set to contribute more than half of the private fundraising deal, the people said.

FWD is switching its focus to list in Hong Kong as early as next year, after plans for a potential US listing hit a snag amid regulators' increasing unease over the long arm of the Chinese government, the people said.

Recent market volatility and feedback from investors also factored into the decision, the people said. While FWD had secured approval from the US Securities and Exchange Commission (SEC) to begin marketing the IPO to investors, the company decided to switch its venue to Hong Kong, they said. The listing could have raised as much as US$2 billion, Bloomberg News has reported.

A representative for FWD Group declined to comment, while representatives for Apollo, CPPIB and Swiss Re did not immediately respond to requests for comment made outside normal business hours.

The value of the insurer's new business climbed 45 per cent in the first half of this year from a year earlier. In the third quarter, the same figure - a key metric of profitability - grew year on year by more than 20 per cent, according to its SEC filings.

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

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