Start-ups listed on Beijing’s ‘new third board’ eye Hong Kong IPOs
Agreement between Hong Kong bourse operator and exchange for start-ups in Beijing seen as paving the way for dual listings
A number of Chinese start-ups trading on National Equities Exchange and Quotations, or Beijing’s “new third board”, are eyeing flotations in Hong Kong after the city launched new listing rules this week, according to lawyers and bankers.
“Some of our customers, who are now listed on the new third board, have shown an interest in listing either on Hong Kong’s GEM, or the city’s main board. They would like to list here, as listing in Hong Kong is recognised as good for promoting their businesses in international markets,” Stephen Chan Yiu-kwong, a partner at US-based law firm Dechert, said in Hong Kong.
Hong Kong Exchanges and Clearing, which operates Asia’s third-largest stock market, launched its biggest listing reform in 25 years on Monday. It now allows technology companies with dual-class shareholding structures, as well as biotechnology companies with no revenue, to list in the city.
The GEM is the HKEX’s second board. Previously called the Growth Enterprise Market, it does not require companies to have a profit record, but they need a combined cash flow of HK$30 million (US$3.82 million) in the two years leading up to their listing. The HKEX’s main board is for bigger companies and requires them to have a combined profit of HK$50 million in the three years leading up to their listing.
In another move that is expected to attract more technology companies to list in Hong Kong, the HKEX signed an agreement with National Equities Exchange and Quotations (NEEQ) in Beijing two weeks ago. NEEQ was started in 2012 to help fund innovative start-ups as mainland China’s third exchange after Shanghai and Shenzhen. By the end of last year, 11,600 companies had signed up to trade on it; it has raised 400 billion yuan (US$63.06 billion) since its inception.
