(Yicai) April 16 — More than 500 companies are waiting to list in Hong Kong, but initial public offering sponsors are very much in short supply.
Hong Kong Chief Executive John Lee revealed this week that the city’s IPO pipeline has in excess of 500 businesses. According to Deloitte, one of the “Big Four” accounting firms, more than 560 have submitted listing applications that are still valid.
The city’s IPO market has got off to a strong start this year after reclaiming the global top spot for proceeds last year. In the three months ended March 31, more than USD14 billion was raised by companies going public in the city, keeping it first internationally, Lee said at HSBC’s third Global Investment Summit on April 14. Total fundraising was up six-fold.
IPO activity is expected to peak in the second half of the year, with more than 700 projects already requiring a sponsor. The market’s strength has raised concerns about whether Hong Kong investment banks have enough qualified personnel to keep up.
As of the middle of last month, Hong Kong had only a little over 8,000 active Type 6 licence holders. And because IPO personnel with signing and supervisory authority must meet additional experience requirements, the pool of fully qualified people is even smaller.
One investment banker said some banks have started bidding aggressively for experienced sponsors with higher pay, while becoming more selective about new IPO projects and even declining some potential deals. Some industry participants said sponsors are also looking at bringing in well-qualified law firms as a temporary way to ease staffing pressures.
The same banker said some in the industry have called for more flexible manpower rules, including shortening the period used to count “active” new listings from two months to one month, which would free up sponsor capacity and allow more deals to move ahead. Regulators are still considering the matter.
Editor: Tom Litting