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Momenta granted regulatory approval to list in Hong Kong amid rumoured crackdown
As Beijing appears to tighten rules on the listing of domestic firms incorporated offshore, self-driving tech start-up Momenta gains IPO approval
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Momenta, a leading self-driving technology start-up in China, has become the latest domestic firm to receive regulatory approval for listing in Hong Kong under an entity incorporated offshore.
The nod comes over four months after the last green light given to an applicant with a similar structure. The vetting of firms organised in this manner was reportedly tightened to prevent asset outflows.
Momenta Global Limited, an entity the start-up used to apply for an initial public offering (IPO) in Hong Kong, is incorporated in the Cayman Islands with limited liability, according to the prospectus released today.
Momenta received approval from the China Securities Regulatory Commission (CSRC) last week and passed a hearing of Hong Kong’s stock exchange on Tuesday. The start-up was reported to have made a confidential application to the city’s bourse in late March.
A company that operates a business in mainland China and applies to go public with an offshore entity is known as a “red-chip”, a framework which has been used by firms in sectors where foreign investment is restricted to bypass domestic regulations and maintain flexibility over the past two decades.
Momenta’s approval comes amid concern from the financial sector over whether CSRC had tightened overseas listing rules, after some red-chip companies seeking regulatory approval for an IPO in Hong Kong were asked to change their structure, according to a memo seen by the South China Morning Post.
Instead, the red-chip firms were urged to issue Hong Kong-traded shares, also known as H shares, the memo showed.
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