Breakingviews - Richard Li redefines IPO success
HONG KONG, June 26 (Reuters Breakingviews) - Richard Li is nothing if not relentless. The tycoon's pan-Asian insurer FWD is going public after multiple false starts. A $6.2 billion, opens new tab market capitalisation is less than half what Li once targeted. But there are plenty of silver linings.
When founder and controlling shareholder Li first tried to list his company in New York in 2021, the group aimed for a valuation of up to $15 billion, sources told Reuters. When that floundered, FWD instead tried for a Hong Kong debut in 2022, but rocky markets thwarted a further two attempts there.
FWD's world changed dramatically in the interim. Its closest peers, Asia-focused insurers Prudential (PRU.L), opens new tab and AIA (1299.HK), opens new tab, have shed around a fifth and a third of their value since 2021 as China's economy stalled, leaving Hong Kong's market in a slump. FWD shifted to steadier growth after an action-packed decade of acquisitions.
Its operating profit after tax still outpaces its older, larger rivals, climbing 29% last year to $463 million, while AIA and Pru each managed about 7%. But the value of new business – a measure of estimated future profits from policies sold – rose 14% last year, compared with 28% in 2021.
That makes today's $6.2 billion price tag pretty punchy. At HK$38 per share, the pan-Asian insurer is worth 1.1 times its embedded value in 2024 – roughly in the middle of Pru's 0.9 multiple and the 1.4 times sported by AIA.
The deal stands out in other ways too. If FWD exercises its overallotment option to hit around $510 million in proceeds, it would be level with Mixue's (2097.HK), opens new tab $511 million capital raise in February, the city's largest IPO so far this year.
True, it's far below the $3 billion targeted in New York. However, Li was able to drum up some $1.8 billion through pre-IPO private funding rounds in 2021 and 2022, making up some of the difference. And in some respects the IPO is testing the waters: the company is only selling a small slug of stock – less than 10% – and no existing shareholders are cashing out.
That means Li and fellow owners can still hold out hope that public markets may at some point bump up FWD's value. For now, a successful deal is being redefined as one that can get done at all.
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Reuters
3 hours ago
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Breakingviews - Richard Li redefines IPO success
HONG KONG, June 26 (Reuters Breakingviews) - Richard Li is nothing if not relentless. The tycoon's pan-Asian insurer FWD is going public after multiple false starts. A $6.2 billion, opens new tab market capitalisation is less than half what Li once targeted. But there are plenty of silver linings. When founder and controlling shareholder Li first tried to list his company in New York in 2021, the group aimed for a valuation of up to $15 billion, sources told Reuters. When that floundered, FWD instead tried for a Hong Kong debut in 2022, but rocky markets thwarted a further two attempts there. FWD's world changed dramatically in the interim. Its closest peers, Asia-focused insurers Prudential (PRU.L), opens new tab and AIA ( opens new tab, have shed around a fifth and a third of their value since 2021 as China's economy stalled, leaving Hong Kong's market in a slump. FWD shifted to steadier growth after an action-packed decade of acquisitions. Its operating profit after tax still outpaces its older, larger rivals, climbing 29% last year to $463 million, while AIA and Pru each managed about 7%. But the value of new business – a measure of estimated future profits from policies sold – rose 14% last year, compared with 28% in 2021. That makes today's $6.2 billion price tag pretty punchy. At HK$38 per share, the pan-Asian insurer is worth 1.1 times its embedded value in 2024 – roughly in the middle of Pru's 0.9 multiple and the 1.4 times sported by AIA. The deal stands out in other ways too. If FWD exercises its overallotment option to hit around $510 million in proceeds, it would be level with Mixue's ( opens new tab $511 million capital raise in February, the city's largest IPO so far this year. True, it's far below the $3 billion targeted in New York. However, Li was able to drum up some $1.8 billion through pre-IPO private funding rounds in 2021 and 2022, making up some of the difference. And in some respects the IPO is testing the waters: the company is only selling a small slug of stock – less than 10% – and no existing shareholders are cashing out. That means Li and fellow owners can still hold out hope that public markets may at some point bump up FWD's value. For now, a successful deal is being redefined as one that can get done at all. Follow Katrina Hamlin on Bluesky, opens new tab and Linkedin, opens new tab.
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