Steve Vickers, a retired senior policeman turned commercial investigator, who has supervised over 300 initial public offering due diligence exercises across Asia over the past seven years, praised planned reforms to initial public offering (IPO) rules, saying he had encountered serious problems in the sector.
'There were about 10 per cent of companies that I've looked at which were just not suitable to go public. Another 20 per cent or so of the companies had some issues which needed to be clarified or fixed before going listing. The rest were generally suitable for listing,'' the chief executive of Steve Vickers Associates told the South China Morning Post.
But investment banks did not always welcome being told about problems with listing hopefuls, he said.
'On a few occasions I have had to either resign from an assignment or to refuse to take it on because the sponsors concerned did not approve a sufficiently wide scope of work; one sufficient to fully understand the real circumstances of the target company,' Vickers said.
'Sometimes, the sponsors just did not want to upset their clients.'
After the 2008 global financial crisis caused mass lay-offs at investment banks, sponsors have cut their due diligence budgets, effectively limiting the scope and depth of due diligence work.