At the beginning of last week, Anthony Blass was thinking of listing the company of which he is president and chief executive, I-Quest, on Hong Kong's new Growth Enterprise Market (GEM). When he read the newspaper on Wednesday morning, all that changed.
'Until about six hours ago, we'd been predisposed to what we'd seen here with the GEM market,' he said at the launch of I-Quest's worldroom.com travel information Web site.
But as news emerged that the Securities and Futures Commission had turned down a proposal by the GEM board to reduce the lock-up for management shares to six months, leaving it at two years, he realised that listing on the GEM would be unlikely to gain the approval of the company's venture-capital investors.
'They have said if the lock-up period is more than six months, we're going to Nasdaq,' he said.
I-Quest is not the only company preparing to list in the next year or two that will go to Nasdaq in the United States if the lock-up period is not reduced.
All of the potential listing candidates Sunday Money spoke to said it was, at the least, a negative factor in a GEM listing and, at worst, excluded the GEM totally from their considerations.
The lock-up period is designed to protect investors by preventing managers from using a share offering to cash out of their investment, instead of using the fund-raising exercise to develop the business. But for potential listing candidates, it has become the single most controversial issue of the new board.
