Forceful dealmaking earned Hong Kong billionaire Li Ka-shing the sobriquet “Superman”. The business style of second son Richard is less decisive, judging from the postponement of FWD’s Hong Kong float. The insurer also drew back from a $13bn US listing last year with mooted proceeds of $3bn.
Setbacks for the Li family are reversals for Hong Kong. The fortunes of the dynasty are linked to the city like those of the Ambanis to Mumbai. Richard Li’s activities are admittedly tangential to a business empire whose management older brother Victor has inherited. But shares in CK Hutchison, the key family holding company that Victor chairs, have meanwhile dropped 45 per cent during a bumpy five years for the city.
China’s furious response to the New York listing of ride-hailing group Didi last year stymied plans for FWD’s US initial public offering there. Volatile markets are justifiably blamed for its failure to launch in Hong Kong this year. The postponements point to the hindsight realisation that FWD could have floated last year in Hong Kong amid an Asia tech boom.
Fintech is a strength of a business whose adjusted operating profit before tax rose 64 per cent to $205mn last year. At home, the insurance sector is mature yet fragmented. In mainland China, giants like Ping An and China Life dominate two-thirds of the market. FWD therefore targets developing Asian markets such as the Philippines and Vietnam, where it is growing fast.
It cannot, however, float in Hong Kong at an attractive valuation. Listings there dried up in May, with just one company raising $139mn. For the year, primary offerings have raised less than a tenth of the funds during the same time last year, according to Bloomberg data. In the current environment, FWD might crystallise a market worth close to the $9bn it has been valued at privately.
Hong Kong has cut its economic growth forecast for the year from 3.5 per cent to 1-2 per cent. That compares to 16 per cent at peak in the 1970s, when Li Ka-shing listed his real estate group.
A record 110,000 people have left Hong Kong over the past two years. The Li family has wisely invested a proportion of its wealth overseas. The family and the city are no longer quite so synonymous.