Insurance group FWD has delayed its $1bn Hong Kong initial public offering due to volatile market conditions, according to people familiar with the matter, the latest in a string of listings setbacks for the insurer founded by property tycoon Li Ka-shing’s son.
FWD had sought a valuation of about $9bn and was only recently approved by Hong Kong’s stock exchange to go ahead with the share sale. The company could resume listing procedures when markets become more favourable, according to the people.
FWD, which was founded by Richard Li in 2013, applied to list in the Asian financial hub in February after its attempt to list on Wall Street came under intense scrutiny from US regulators last year.
“It’s definitely off the table for now,” one of the people familiar said, adding that while the company’s board had approved the delay, “at the end of the day this was Richard’s decision”.
“There’s more at stake here than money,” the person said. The latest IPO delay would be a loss of face for Li in his hometown but pushing ahead would have risked the same outcome if shares fell on their first trading day.
The deferral is also a blow for Hong Kong’s stock exchange in a punishing year for new business. IPOs in the city raised just $1.7bn in the first quarter, reflecting a 90 per cent drop from a year ago as the steady flow of share sales from China dried up in the face of a crackdown on overseas listings and Russia’s invasion of Ukraine buffeted markets.
Markets in Hong Kong and greater China have been hit hard by growing uncertainty in recent months as Covid-19 lockdowns in the mainland have threatened economic growth, pushing valuations lower and taking the city’s benchmark Hang Seng index down about a quarter from a year ago.
“Definitely this is not a good timing . . . for any kind of IPO,” said Dickie Wong, executive director of research at Kingston Securities.
“As we all know, most of the Chinese insurance companies are trading at almost close to historical low valuations amid concerns over new regulations in the mainland and also the investment sentiment.”
But the US Securities and Exchange Commission scrutinised the rapidly expanding group over its ties with China, according to people familiar with the matter. Political tensions ultimately prompted it to withdraw its US listings application in December.
FWD, which has a limited presence in mainland China, has focused on snapping up the Asian businesses of retreating rivals, building out operations across 10 markets including Japan, Singapore, Vietnam and Malaysia.
Despite the latest delay, people familiar with Li’s thinking said he still planned to go through with a Hong Kong listing, although there was no clear timeline for doing so.
“They’re expecting to go for it again, hopefully by the end of this year,” one person said. “It’s just the market’s really, really bad.”