- Hong Kong IPO scrutiny seeks to maintain market attractiveness
- Regulators warn banks on unsatisfactory IPO applications
- Over 300 companies, mostly Chinese, filed for Hong Kong listings
HONG KONG, Dec 9 (Reuters) - Investment banks preparing Hong Kong initial public offering applications have been asked to make sure their submissions are up to standard, the city's securities regulator and the stock exchange operator said.
Hong Kong is one of the world's major markets for IPOs and most of the city's listing applicants are Chinese companies looking to raise capital offshore. As a result, the scrutiny of listings is key to retaining its attractiveness to investors.
Regulators believe that a surge in listings in the city had led to some banks working on multiple IPOs simultaneously, resulting in unsatisfactory work on some applications, two sources with knowledge of the matter said.
The warning was issued last Friday, added the sources, who were not authorised to speak to media and declined to be identified.
Asked to comment on the information from the sources, Hong Kong Exchanges and Clearing Ltd (HKEX) said it was "committed to ensuring the timely and robust review of new listing applications."
The exchange continues to engage with issuers, sponsors and professional advisers to "ensure the submission of comprehensive and high‑quality listing materials", a spokesperson said in an emailed statement.
The Hong Kong Securities and Futures Commission (SFC) in a separate statement said that both it and HKEX welcome "quality companies" seeking listing in Hong Kong and support a vibrant capital markets ecosystem.
Hong Kong dominated Asian equity capital market deals with $75 billion raised so far this year, more than triple what was raised last year and the highest since 2021, according to LSEG data.
More than 300 companies have filed to list in Hong Kong, most of them from mainland China.
With investment banks vying to grab a larger share of the IPOs in Hong Kong, local market authorities are concerned that some of the bookrunners are taking on work that exceeds their capacity, one of the sources added.
In recent years, Hong Kong regulators have sharpened their focus on cases of alleged market manipulation and corporate fraud that risk tarnishing the former British colony's reputation as a global financial centre.
The tightening measures in recent years have included penalties imposed on some sponsors, as investment banks that underwrite listings in Hong Kong are called, for their alleged lack of stringent due diligence on some IPO applications.
In the latest move, authorities warned the IPO sponsors that if their listing applications did not satisfy regulatory requirements, they would be subjected to punitive measures - including fines - the sources said.
Reporting by Selena Li; Editing by Sumeet Chatterjee, Edwina Gibbs and Thomas Derpinghaus
Source: Reuters