ExclusiveHong Kong stock exchange’s ‘double-dip’ IPO reform gets few takers as investors shy away from listings

In the first quarter, only Beijing Health Guard Biotechnology filed to use the rule change, among 65 companies that sought listings

Lack of interest has more to do with lacklustre IPO activity than the reform per se, which will draw interest when listings pick up, analysts say

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The Connect Hall at Hong Kong Exchanges and Clearing, the city’s bourse operator, in Central. Photo: Jonathan Wong

Published: 11:28am, 2 Apr 2024Updated: 12:10pm, 2 Apr 2024

A recent Hong Kong Exchanges and Clearing (HKEX) measure that allows investors to “double dip”, implemented as part of an attempt to revive the city’s sluggish initial public offering (IPO) market, has received a negligible response.

Under the rule, existing shareholders and cornerstone investors of a new IPO applicant can subscribe for additional shares, or double dip, under certain conditions. The HKEX introduced the reform in November, around the same time it launched other measures, such as a digital IPO platform, to breathe life into the moribund primary market.

The move aims to encourage more companies to involve large-ticket or well-known investors, who are usually brought into the IPO process before the formal book-building process starts, to ensure a successful listing.

However, amid sluggish IPO activity, the take-up rate has been minimal so far.

People pass under screens showing index and stock prices outside Exchange Square in Central, home of the city’s bourse operator Hong Kong Exchanges and Clearing, on February 15, 2024. Photo: Sun Yeung

In the first quarter of 2024, only one company, Beijing Health Guard Biotechnology, filed a waiver to use the rule change among 65 companies that sought listings on the mainboard, according to the Post’s research.