Two bull statues are seen outside the Hong Kong Exchanges and Clearing building in this undated photo. (PROVIDED TO CHINA DAILY)
HONG KONG - Companies with dual-class shareholding structures and biotechnology firms yet to generate revenue will be able to apply for listings on the Hong Kong stock exchange from April 30 under new rules, Hong Kong Exchanges and Clearing (HKEx) announced Friday, heralding the biggest changes to HKEx listing rules since 1993.
“The conclusions of a consultation into reform of the bourse’s listing rules would be announced on April 24, with the new rules becoming effective the Monday after. When the new rules go into effect, biotechnology firms that have yet to generate revenue, as well as mainland technology companies seeking secondary listings in Hong Kong will also be able to apply for listings,” HKEx Chief Executive Charles Li Xiaojia said at a forum on Friday morning.
The conclusions of a consultation into reform of the bourse’s listing rules would be announced on April 24, with the new rules becoming effective the Monday after.
Charles Li Xiaojia,
HKEx Chief Executive
The Hong Kong stock exchange has been reforming its initial public offering (IPO) rules to lure new-economy company listings since the city lost the US$25 billion fund-raising business of mainland e-commerce behemoth Alibaba Group Holding in September 2014 - the biggest in United States IPO history.
The listing regime overhaul work also reflects HKEx’s desperate need to sharpen its edge in the race to be the world’s largest stock IPO market amid fierce competition from New York, Shenzhen, Singapore, and other bourses.
READ MORE: HK exchange proposes new listing regime to attract tech firms
Dual-class share structures, that enable founders to maintain control of the company even though they only hold a minority of the listed shares, have been banned in Hong Kong since the mid-1980s for better investor protection. This rendered Hong Kong less attractive to big technology firms many of which use such corporate governance structures.
Li expressed confidence that giants reportedly seeking listings, including oil firm Saudi Aramco, mainland smartphone and laptop maker Xiaomi Inc and Alibaba Group Holding’s affiliate online payment firm Ant Financial Services Group, could now list in Hong Kong with the changed rules, and Li did not see plans by the Chinese mainland to create China depositary receipts (CDRs), similar to American depositary receipts, to lure tech firms home as a threat to Hong Kong.
While the city’s bourse is beefing up its listing regime revamp, more and more technology enterprises are hastening their IPO issuance processes in Hong Kong.
Mainland insurer Ping An Insurance Group Co of China’s subsidiary Ping An Healthcare and Technology will start an IPO roadshow on April 23. The healthcare servicing platform already solicited seven cornerstone investors that may raise more than HK$10 billion ($1.2 billion).
Media reports said Xiaomi Inc may probably first list in Hong Kong and then issue CDRs in the mainland equity market with a valuation of as much as US$135.1 billion.
Business consulting firm Deloitte China anticipates at least five mega IPOs with new economy concepts related to healthcare, financial technology and technology sectors for 2018. A few biotechnology companies with mainland or overseas backgrounds are expected to seek listings in Hong Kong once the new rules become effective April 30.
New listing regime for biotechnology and companies from emerging and innovative industries will provide further market impetus and new growth drivers, accounting advisory firm KPMG says.
“The Hong Kong exchange would also welcome technology firms that are now listed on the mainland’s National Equities Exchange and Quotation (NEEQ) for smaller companies, also known as the ‘third board”, HKEx’s Li said, adding that these companies would not have to delist from that board in order to list in Hong Kong.
ALSO READ: Investor body seeks safeguards after dual-class shares permitted
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