Opinion | Put this IPO through the mixer and it looks like cashing in
Conch Venture provides a way for management of Conch Cement to unlock its holdings, but the 'reverse spin-off' does raise eyebrows
Bankers and lawyers have been reading the draft listing prospectus of China Conch Venture with great interest this month. What everyone is wondering is how can it list and cash in from the same asset twice.
The asset at stake is Asia's largest cement producer, Anhui Conch Cement, which has been listed in Hong Kong since 1997. Its management is seeking to list its 17.7 per cent control through Conch Venture. You can call it a "reverse spin-off" - which is rare, if not unprecedented.
"If this can be done, I am sure my boss would love to follow suit and list his holding again," said the company secretary of a listed private enterprise who has rung up a lawyer to study the case.
It is controversial because the listing rules state that "it would not be acceptable to the Listing Committee that one business supported two listing statuses".
Listing their stake – worth more than HK$20 billion – in Hong Kong is the only way out
To be fair, Conch Venture has its own operating business other than Conch Cement. It has some cement-related business such as residual heat power generation and waste incineration as well as a port and a hotel. Its operating business is big enough to satisfy the listing requirements on revenue and profit.