(Feb 13): Hong Kong is considering a plan to allow a broader range of companies to file for initial public offerings confidentially, according to people familiar with the matter, as the city seeks to cement its lead among global listing venues.
The proposal would expand the privilege of private filings beyond technology and biotech to include traditional sectors, said the people, who asked not to be identified discussing private deliberations. The change is expected to be part of a wide-ranging market consultation paper to be published by Hong Kong Exchanges & Clearing Ltd as soon as the end of February.
The contents and timing of the paper could still shift during the Lunar New Year holidays and ahead of the city’s upcoming budget, the people added.
Currently, only overseas-listed companies with at least HK$10 billion ($1.6 billion) market capitalisation and good track record as well as biotechnology or advanced technology firms are able to file confidentially.
The existing framework is designed to protect R&D-heavy firms from the “heightened and disproportionate risk” of premature disclosure, according to HKEX. However, the standard requirement for other issuers to publish detailed business overviews, audited accounts, and shareholding structures months before a debut has deterred some wary of the uncertain listing window.
The Hong Kong exchange declined to comment on specific proposals, adding that it’s committed to reviewing its listing franchise and to “look at more ways to further enhance our competitiveness.”
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The Securities and Futures Commission declined to comment on questions, but said in a statement that it “will continue to work closely with HKEX in exploring initiatives to further enhance the competitiveness of Hong Kong’s listed market, with a view to ensuring that Hong Kong remains the preferred listing destination of high-quality companies.”
Hong Kong’s IPO market last year revived to reclaim the global top spot, and also saw the busiest January in history. But the flood of applications has also strained banks, with regulators warning brokerages of shoddy application filings.
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