White Collar | Opinion: Why IPO Connect will be needed for Hong Kong to win the biggest listing deal in history
Bourses around the world salivate at the prospect of landing Saudi Aramco’s US$100 billion public offering
Hong Kong is on the short list to host the biggest initial public offering in history – Saudi Aramco’s US$100 billion public offering – but the city will need to launch the so-called IPO connect as soon as possible to have a chance of attracting the oil giant.
Why? Because the IPOConnect scheme would give Hong Kong a competitive edge by allowing mainland investors to subscribe to initial public offerings in the city.
Currently the two Connect schemes between Hong Kong and Shanghai and Hong Kong and Shenzhen only allow investors to conduct cross border trading in companies already listed but not for IPOs.
Saudi Aramco has appointed HSBC as one of the sponsors for its mega listing which is expected to raise US$100 billion, the largest amount ever raised in an IPO worldwide. That estimate is based on expectations that Aramco will offer 5 per cent of its equity, valuing the company at about US$2 trillion.
With such sheer size in fund raising, it is no surprise to see government officials, regulators and stock exchanges in Hong Kong, London and New York vying for the prize.
Last month Saudi Aramco sent executives to meet with Hong Kong regulator the Securities and Futures Commission and stock exchange representatives, indicating the city was on the short list. But Hong Kong is seen as “too small” from the oil giant’s point of view, some insiders told White Collar.