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HONG KONG (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.
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.
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.
