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Leaving home

18 June 2021 By Jennifer Hughes

Companies looking to raise money in public markets typically want to generate some buzz. Richard Li, the entrepreneurial son of nonagenarian Hong Kong tycoon Li Ka-shing, is passing up the opportunity by choosing New York over his hometown for the initial public offering of FWD. Growth at his pan-Asian insurer will attract investors, but without fully capitalising on name recognition and a region with higher valuations.

The younger Li has widened his earlier focus on technology and telecommunications to include finance. He started FWD in 2013 after buying ING’s insurance businesses in Hong Kong, Macau and Thailand. Further deals for castoffs from AIG, MetLife and others have since expanded the portfolio to include Indonesia, Japan and beyond.

This will not be Li’s first time under the bright lights of Broadway. He has raised $800 million for two special-purpose acquisition companies, with a third on the way under the Bridgetown brand, but for those he has PayPal founder Peter Thiel’s star power. For FWD, going to the Big Apple will enable Li to keep control using a dual-class share structure. While FWD fancies itself a disrupter, the Hong Kong bourse restricts such super-voting stocks to technology outfits.

Although the prospectus FWD submitted to U.S. securities regulators is confidential for now, the company is planning to raise between $2 billion and $3 billion and aiming for a market value of between $13 and $15 billion. That would put it next to similarly sized Lincoln National and Principal Financial, both of which are over a century old and New York-listed.

At home, comparisons might have leaned more toward AIA. The $148 billion company trades at 2.4 times book value while Lincoln National’s multiple is just 0.7 times. A $15 billion market capitalisation for FWD would represent about 2.6 times, per figures available in bond filings.

Perhaps Li is nervous about his patchy Hong Kong track record. Over the past five years, his PCCW telecom flagship has returned an annualised 4%, lagging the Hang Seng Index’s 11% and AIA’s 18%. Even so, the family name carries value in the city, and his insurer seems to be sacrificing that premium.

 

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