Online delivery start-up Lalamove favours Hong Kong for future IPO as listing reforms boost home city’s appeal
- ‘The capital market in Hong Kong has carried out many reforms [that make] it an ideal place for tech companies to raise funds,’ says COO Paul Loo
- The Covid-19 pandemic has boosted e-commerce and hence demand for delivery services
“There are many legal, accounting and banking professionals in Hong Kong to support technology companies to raise funds in the capital markets.
“The Hong Kong government, under the current and previous leaders, has carried out many programmes to boost the technology sector, which has helped local tech firms like Lalamove to grow quickly.”
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The Securities and Futures Commission (SFC) is poised to give the go-ahead for bourse operator Hong Kong Exchanges and Clearing Limited (HKEX) to seek public feedback on plans to allow unprofitable or pre-revenue tech companies to list, two sources told the Post on Friday.
In January the HKEX introduced a regime allowing special purpose acquisition companies (SPACs) to list. This further enhanced Hong Kong’s attractiveness as a fundraising hub for technology companies, Loo said.
SPACs are shell companies created with the objective of raising capital to buy assets within a set period. Most of the 13 SPAC applicants vying to list in Hong Kong want to invest in high-growth tech start-ups.
Lalamove filed a confidential listing application in the US in mid-2021 to raise up to US$1 billion, but abandoned the plan when Beijing and Washington upped their scrutiny of tech companies intending to raise capital there, Bloomberg reported last year.
Lalamove was founded in in Hong Kong nine years ago by Chow Shing-yuk, a Stanford graduate and former professional poker player.
The company operates under the Houlala brand in more than 350 mainland Chinese cities and as Lalamove in more than 30 cities across Asia and Latin America.
It offers users a mobile phone app to connect with 1.8 million drivers for on-demand delivery of goods like food, flowers and birthday cakes by motorcycle, van or lorry.
The Covid-19 pandemic has boosted e-commerce and hence demand for delivery services.
This has helped Lalamove to double its business in the past two years. It now handles about a million orders a day, Loo said.
“We do not need to rush for an IPO as we have already had two rounds of financing over the past two years even amid the pandemic, with new investors who believed in our long-term growth financing our international expansion plan,” said Loo.
Lalamove and other potential listing candidates might be biding their time, waiting until the market bounces back before going public, according to Louis Tse Ming-kwong, managing director of Wealthy Securities.
The Hang Seng Index, Hong Kong’s benchmark gauge, is at its lowest level in 11 years as central banks such as the Fed and the Bank of England spook the markets by raising borrowing costs to try to bring sky-high inflation under control.
“Hong Kong’s stock market sentiment is so poor at the moment that it is hard for companies to raise funds at a good valuation,” said Tse.
“The outlook is not hopeful as both US and Hong Kong interest rates will continue to rise until next year.”
