Richard Li-backed insurer FWD Group has officially filed for a Hong Kong initial public offering (IPO), pointing to its ability to target Asia’s fastest growing markets.

In the prospectus, the insurer described its value proposition as offering «easy to know» insurance options, with easily understood features, often sold via e-commerce channels.

That’s particularly important as FWD’s markets include Southeast Asian countries the Philippines, Indonesia, Vietnam and Thailand, which have large, untapped populations of potential insurance customers.

Southeast Asia’s Unbanked

Of the around 400 million adults in Southeast Asia, around 198 million are unbanked -- or don’t have a bank account -- while another 98 million are underbanked, with a bank account, but without access to credit, investments and insurance, according to the e-Conomy SEA 2019 report published by Google, Temasek and Bain & Co. in October 2019, prior to the start of the Covid-19 pandemic.

In a February 2021 report, British research service Merchant Machine listed the Philippines and Vietnam in its top 10 list of the most cash-reliant countries, with the Philippines at 66 percent unbanked and Vietnam at 69 percent, while Indonesia was at 51 percent.

FWD also pointed to the region’s expanding middle class, wealth accumulation and protection gap as driving the region’s growth. The company said its underlying value of new business (VNB) increased at a compound annual growth rate of 18.8 percent since 2019 to $446 million in 2021.

Bumpy Path to IPO

However, the path to the latest attempt to go public hasn’t been smooth for FWD.

In December, the insurance arm of Li’s Pacific Century Group had withdrawn its IPO filing for FWD in the U.S. after deciding not to proceed. Bloomberg had reported the U.S. listing had been expected to raise as much as $3 billion.

The decision to ditch plans for the U.S. IPO came as China tightened its grip on overseas listings. In December, pressured by Chinese regulators, ride-hailing giant Didi announced its decision to delist in New York just six months after a $4.4 billion market debut and shift its listing to Hong Kong.

Reportedly to Raise $1 Billion

Bloomberg had reported earlier this week, citing people familiar with the matter, that FWD was aiming to raise $1 billion, in what may indicate a scaling back of fund-raising ambitions since the scuttling of the U.S. IPO. The figures on how much FWD is planning to raise in the IPO have been redacted in the prospectus filed to HKEx Monday.  

The insurer has, however, been able to tap the private markets for an even larger amount than what Bloomberg mooted.

Final Round Investment

In what the prospectus called the «final round» investment, FWD raised a total of $1.625 billion in December and January.

The insurer has brought a strong cohort of substantial shareholders to the table, in addition to Hong Kong-based tycoon Richard Li.

Singapore’s sovereign wealth fund GIC, via Crimson White Investment and GIC Blue, invested around $100 million in the final investment round.

Swiss Re as Key Investor

In the final round of fund raising, Bermuda-based reinsurance company Athene, which is indirectly owned by global investment manager Apollo Global Management, invested around $400 million in the insurer, the prospectus said.

Siam Commercial Bank, which is around 23 percent owned by the King of Thailand, invested around $180 million, while CPP Investments, which is managed by the Canada Pension Plan, invested around $150 million, the prospectus said.

Future Financial Investment, which is controlled by Asian alternative asset manager HOPU, invested around $300 million in the series A round in 2018.

Swiss Re group companies have also been investors, starting from Swiss Re Investments’ up to $425 million investment in 2013, followed by another $20 million in 2019, around $200 million in October 2020 and an investment from Swiss Re Pica of around $75 million in the final fundraising round, according to the prospectus