After the impact on the listing of U.S. stocks ran aground, recently, Fuwei insurance group submitted its statement to the Hong Kong stock exchange, with Morgan Stanley, Goldman Sachs, China Merchants Bank International and JPMorgan Chase as its co sponsors.
According to the prospectus, in the past 2019, 2020 and 2021, the total revenue of Fuwei group was US $6.232 billion, US $9.487 billion and US $11.697 billion respectively, and the corresponding net profits were US $332 million, US $252 million and US $249 million respectively. Last year was its first profit in three years.
Previously, according to the media quoted sources, the Fuwei insurance plans to raise US $1 billion in Hong Kong shares, while it previously planned to raise US $2 billion to US $3 billion in the United States. Sources pointed out that the company may be listed in the first half of this year, depending on market fluctuations and investor demand, but it may be delayed. Representatives of Fuwei group declined to comment.
Shen Meng, director of Xiangsong capital, said in an interview with Huaxia times that if the company has richer financing channels after its successful listing in Hong Kong, it can expand on a larger scale with such advantages. At present, Fuwei insurance is still a regional insurance group, whether in the mainland or in a large international market, Will become the potential market expansion of Fuwei group in the future.
start and expand all the way ”
With regard to the purpose of raising funds for the Hong Kong IPO, Fu Wei insurance said that it plans to strengthen the company’s share capital, solvency and central working capital, and establish a capital buffer exceeding the applicable statutory requirements, so that the company can further penetrate the customer and channel coverage in the company’s business in order to support organic growth and opportunities, including deepening the company’s digital capability and strategy, Meet the provisions contained under the supervision of the insurance group, etc.
According to the prospectus, after the loss of US $332 million and US $252 million in 2019 and 2020 respectively, the net profit of Fuwei insurance in 2021 was US $249 million. Meanwhile, in 2019, 2020 and 2021, the total revenue of Fuwei group in the three years was US $6.232 billion, US $9.487 billion and US $11.697 billion respectively,
In this regard, Fu Wei insurance said that the company’s net profit in 2021 was mainly due to the increase of investment return, while the net loss in 2019 and 2020 was mainly due to the increase of financing costs, reflecting additional bank lending in 2020, one-time acquisition and related integration costs, IFRS 9 and 17 and the implementation cost of insurance group supervision, The costs are partially offset by short-term fluctuations in the return on investment.
According to the reporter, as an insurance company under Li Zekai, Fuwei insurance began with “buy buy” and also became “buy buy”.
In October 2012, Li Zekai’s Yingke development group spent US $2.14 billion to acquire the insurance business units of ing in Hong Kong, Macao and Thailand, and named it Fuwei group in July 2013.
Subsequently, Fuwei group chose to rapidly expand its scale through intensive M & A until 2020, from the initial three markets to more than ten markets. The insurance business territory has successively expanded to the Philippines, Indonesia, Singapore, Vietnam, Japan, Australia, Malaysia, Thailand and Cambodia, becoming a transnational insurance group.
In addition, the mainland market has long been considered by Fuwei insurance. In its prospectus, it said it would continue to explore expansion opportunities, especially in the Chinese market. At the same time, it is emphasized that China is the largest life insurance market in Asia. The development of Dawan district and Hong Kong Insurance link will help Hong Kong insurance companies develop mainland customers. Fu Wei insurance considers obtaining a complete life insurance license in the mainland and making selective investment or acquisition.
As early as 2006, Li Zekai tried to enter the mainland insurance market through the acquisition of life life (now Fude life), but failed to obtain the support of the CIRC. On November 10, 2014, Li Zekai’s Fuwei insurance announced the establishment of a representative office in Shanghai, saying that it was looking for a joint venture partner to apply for a joint venture life insurance license from Chinese regulators in order to get involved in the mainland insurance market.
However, as of now, the group has 14 licences / licenses (including long-term insurance business, life insurance business, etc.), and the countries and regions covered by it do not include Chinese mainland.
Shen Meng believes that as a life insurance company managed by Li Zekai, it maintains a good interactive relationship with mainland regulators, but as a foreign-funded life insurance enterprise, there is still a necessary approval process to obtain approval. However, the financial service industry is the basic to promote opening-up, and it should not be difficult to obtain approval. However, at present, the saturation of China’s life insurance market is very high. If we can’t come up with differentiated product solutions and want to sell conventional life insurance products in the weak cycle of consumption boom caused by the current economic downturn, I’m afraid there will be a lot of pressure.
from the United States to Hong Kong, tortuous listing
Combing the one-year long listing of Fuwei insurance is not smooth. On February 22 last year, media reports pointed out that Fuwei insurance plans to be listed in Singapore or merged with spac listed in the United States to maintain the dual shareholding structure and consider whether to be listed in Hong Kong, which also means that Hong Kong, Singapore and the United States have been under consideration.
On September 23, 2021, Fuwei insurance submitted its listing application to the US SEC. The target fund-raising amount is about US $2 billion to US $3 billion. After the fund-raising target is achieved, the company’s valuation will reach about US $13 billion to US $15 billion. In addition, according to the updated listing documents of Fuwei group, multiple investors had been locked to subscribe for a total of US $900 million, close to one-third of the maximum financing amount.
Three months later, on December 20 last year, Fuwei pressed the “termination key” in the listing process in the United States. The company submitted an application to withdraw its listing in the United States, cancelled its listing plan in the United States, issued and sold securities, and said that the company was considering other financing channels.
As for the reasons why Fu Wei insurance abandoned its listing in the United States, some analysts pointed out that it may be related to the restrictions on China concept shares in the United States.
Last month, on February 23, 2022, Chen maobo, the financial secretary of the HKSAR government, said in his 2022 / 2023 budget that Chinese enterprises have to face increased risks and uncertainties when listing on overseas markets, and many Chinese stocks have chosen to return. Hong Kong has made preparations for this, including allowing greater China companies that do not have different voting structures and are non Chuang Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) to be listed in Hong Kong for the second time, and giving greater flexibility to dual major listed issuers.
According to the data, there are only 7 Insurance Companies in the A-share market and 10 insurance companies in the Hong Kong stock market. After 2017, no insurance company has successfully listed on the Hong Kong stock market.
In this regard, Shen Meng said that the reason why there are few cases of insurance companies listing in Hong Kong shares in recent years is that there are few local insurance companies in Hong Kong, and mainland state-owned insurance companies have basically issued H shares. Few private insurance companies meet the requirements of the mainland securities regulatory commission to issue H shares in Hong Kong. Therefore, the number of IPO of insurance shares in Hong Kong is small in recent years, This is because the number of reserve quasi listed companies is small.
