Tycoon Richard Li's FWD considers shifting US IPO to Hong Kong - sources

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10/11/2021 05:29

(Adds grafs 6-18 with more detail)
    By Scott Murdoch, Julie Zhu and Kane Wu
    HONG KONG, Nov 10 (Reuters) - Asian insurer FWD Group,
controlled by Hong Kong billionaire Richard Li, is contemplating
shifting its $2-$3 billion share sale from the United States to
Hong Kong, said two sources with direct knowledge of the matter.
    The Hong Kong-based company, which filed confidentially in
June for the New York initial public offering (IPO), is
considering the switch amid delays by U.S. regulators
scrutinising the plan and lacklustre interest from investors,
the sources told Reuters.
    A FWD spokesman declined to comment on Wednesday when asked
by Reuters about a possible change in the listing venue. 
    The insurer has yet to receive the nod from U.S. regulators
for its IPO to go ahead before the end of the year, a timetable
that sources had flagged previously.  urn:newsml:reuters.com:*:nL2N2NZ16T
    One source said the delays had increased concerns that
approval would not be granted, while the second source cited
lukewarm interest from investors.
    The uncertainty has prompted FWD and its advisors to
consider returning to Hong Kong for its market debut, the two
sources said. A final decision has yet to made, a third source
said. 
    FWD has faced questions from the U.S. Securities and
Exchange Commission on its mainland China ties and has been
treated by authorities as a Chinese business rather than a Hong
Kong entity, said one of the sources and a fourth person. 
    The four sources could not be named as the information has
not yet been made public.
    FWD last week filed amended prospectuses with the SEC that
included an expanded risk factor section, which said the company
could not guarantee Beijing would not interfere in its business.
 urn:newsml:reuters.com:*:nL1N2RU1X5
    FWD emphasized in the filing it had no mainland business and
maintained only representative offices, some information
technology and support staff in China.
    The SEC has started to issue new disclosure requirements https://www.reuters.com/business/finance/exclusive-sec-gives-chinese-companies-new-requirements-us-ipo-disclosures-2021-08-23
 to Chinese companies seeking to list in New York as part of a
push to boost investor awareness of the risks involved, Reuters
reported in August.
    FWD's foundation was laid in 2012 with the acquisition of
ING's Hong Kong, Macau and Thailand business units for $2.1
billion, and it has since continued this bolt-on approach to
expand in the region.
    It now has a business presence in 10 markets in Asia and
sources previously estimated the New York IPO would value the
company at between $13 billion and $15 billion.
    
    SHAREHOLDING STRUCTURE
    A Hong Kong listing would require FWD to change its
dual-class shareholding structure, given it has weighted voting
rights. Hong Kong's listing rules only permit weighted voting
rights for innovative companies and FWD does not fit the
exchange's definition of that category.
    There has been indicative interest in up to $500 million
worth of the shares to be sold in the planned New York IPO,
according to the firm's filings.
    The foundation of Richard Li's father Li Ka-Shing, Hong
Kong's richest man, has indicated it could buy up to $300
million worth of stock. Richard Li's PCCW Ltd, a major internet
service provider in Hong Kong, could take $100 million, the
filings showed.
    FWD's controlling shareholder, Pacific Century Group –
another Richard Li firm – has also flagged its interest to
invest $100 million.    

 (Reporting by Scott Murdoch, Julie Zhu and Kane Wu in Hong
Kong; Editing by Sumeet Chatterjee and Jane Wardell)
 ((Scott.Murdoch@thomsonreuters.com;))