Coronavirus: IPO applicants face uphill climb as regulators scrutinise companies’ ability to withstand impact
- Applicants have to clarify whether they have experienced any disruption and the extent to which they have been able to resume normal operation after the outbreak
- IPO activity in Hong Kong has slowed this month, after a busy January in which 22 companies raised US$1.1 billion
Companies face increased difficulties in launching IPOs as securities watchdogs and stock exchanges step up scrutiny of applications, demanding candidates to clarify the impact of the deadly coronavirus outbreak on their operations, according to financial advisers and lawyers.
The regulators were being very cautious because they need to protect the interest of investors, said Wilson Chow, global TMT [telecom, media and technology] industry leader at professional services firm PwC.
“Therefore, they are paying attention to whether the virus outbreak will dampen the prospects of IPO candidates,” he said in a recent interview.
IPO applicants and their sponsors have been scrambling to gather information and analyse the impact of the Covid-19 outbreak after bourse operator Hong Kong Exchanges and Clearing raised questions about their business viability. But Chow said that the situation was complicated as the epidemic is still unfolding and has affected the IPO market in the short term.
