Axed Budweiser IPO cost investors up to HK$36 million in interest payments, highlighting problem of long settlement period in Hong Kong
- In Hong Kong, stocks can only start trading five days after book close
- City’s bourse is very advanced in its study of shortened settlement cycles, law firm says
The cancellation of Budweiser Brewing Company APAC’s mega flotation has hurt more than just Hong Kong’s global listings ambitions. Retail investors, who had borrowed a combined HK$38 billion (US$4.8 billion) for the initial public offering, have lost thousands of dollars in interest payments, an issue that has once again highlighted the city’s lengthy listings process.
The listing would have been the largest globally this year and would have boosted the city’s chances of reclaiming the crown of the world’s top IPO market.
At an interest rate of between 3.8 per cent and 5 per cent, the investors will have to collectively pay HK$28 million to HK$36 million in interest.
“The cancellation of Budweiser’s IPO shows more needs to be done to shorten the IPO settlement period, which will benefit investors and will enhance overall market efficiency. It is not ideal – locking up such a huge sum of capital for almost a week,” said Laurence Li Lu-jen, chairman of government-appointed industry promoter Financial Services Development Council.
A spokeswoman for Budweiser said: “The application forms clearly state the refund will be without any interest, and this is aligned with market practice.”