FWD Group, the Hong Kong-based insurer backed by tycoon Richard Li Tzar-kai, is planning to raise up to US$3 billion from an initial public offering in the US next month, according to a person familiar with the transaction.

HSBC, JPMorgan, Morgan Stanley, and Goldman Sachs are leading the share sale. JPMorgan did not immediately have a comment, while HSBC and Goldman declined to comment on Tuesday. Morgan Stanley did not immediately respond to a request for comment.

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An FWD spokesman declined to comment on the IPO details on Tuesday.

If successful, FWD's listing will be the biggest US flotation by a Hong Kong-based insurer, according to data provider Refinitiv. It will also be the largest IPO by an insurer headquartered in China or Hong Kong since China Life Insurance raised US$3.5 billion on the New York Stock Exchange in December 2003.

A successful listing by FWD could prove to be a shot in the arm for Hong Kong and Chinese issuers of American depositary shares as IPOs dried up last month after Beijing clamped down on overseas listings by China's tech companies. The cyberspace watchdog proposed that all Chinese companies with data of more than 1 million users clear a security review before raising funds abroad. The tightened listing criteria came as Didi Global went ahead with its US$4.4 billion New York IPO in June even after authorities encouraged the ride-hailing company to delay its listing and examine its data security measures.

Tom Chan Pak-lam, chairman of Hong Kong Institute of Securities Dealers, a local brokerage industry body, said that China's regulatory crackdown will not have an impact on FWD's upcoming IPO as it is as a Hong Kong insurance company and not a mainland technology company.

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In July, only one issuer from China – Sentage Holdings – listed in the US, raising US$20 million, compared with nine deals that mopped up US$7.6 billion in June, Refinitiv data showed.

"For now, investors are sitting on the sidelines as they await further clarity on future regulatory directions from China and see how future listings could be affected," said a Hong Kong-based banker.

Market liquidity for IPOs remains strong, he added.

Another source said that FWD preferred to list in the US over Hong Kong because it wanted to list as a weighted voting rights (WVR) company.

In Hong Kong, only technology and innovative firms qualify for WVR listings, while FWD is seen by Hong Kong regulators as an insurance company, effectively ruling it out as a WVR company.

FWD is the insurance arm of Pacific Century Group, the sprawling investment group of Richard Li, the younger son of tycoon Li Ka-shing. The insurer had 9.8 million customers, 6,100 employees and US$62.6 billion in assets as of December last year, according to its website.

Swiss Re, the world's largest reinsurer, expects China's insurance market to quadruple to US$2.36 trillion by 2032. Photo: AFP alt=Swiss Re, the world's largest reinsurer, expects China's insurance market to quadruple to US$2.36 trillion by 2032. Photo: AFP

In China, where FWD Group maintains a representative office in Shanghai, it has applied to set up a joint venture as it eyes the world's second-largest insurance market. China's insurance market is expected to quadruple to US$2.36 trillion by 2032 and overtake the US along the way, according to Swiss Re.

The insurer has been expanding aggressively in Asia through acquisitions, and a US IPO could provide FWD with more capital as it looks to strike more deals and acquire more licences that will enhance its distribution and scale in markets.

In June last year, it bought a 30 per cent stake in the life insurance arm of Bank Rakyat Indonesia for about US$300 million.

FWD has a presence in Hong Kong, Thailand, Indonesia, the Philippines, Singapore, Vietnam, Japan and Malaysia.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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