How Hong Kong stock exchange has simplified the IPO process
Jack Chan, EY China’s chairman, describes how the HKEX and SFC’s new Technology Enterprises Channel has streamlined the process for technology firms
“The surge is largely driven by substantial government investments in research and development, and support to enterprises spearheading the technology advancement and innovation ecosystem,” said Jack Chan, EY China chairman and Greater China regional managing partner. “National strategic plans like Made in China 2025 have further enhanced market penetration, allowing Chinese enterprises to capture significant global market presence.”
Made in China 2025 was unveiled 10 years ago and has largely succeeded in encouraging the development of technology and advanced manufacturing sectors.
Responding to this, HKEX and the Securities and Futures Commission (SFC) jointly launched the Technology Enterprises Channel (TECH) in May to help ease the listing process for specialist technology companies (under Chapter 18C of the listing rules) and biotech companies (18A). The channel will make dedicated teams available to help new firms get advice on listing rules, requirements and eligibility, especially as they apply to firms with products the markets may not be familiar with.
HKEX’s Guide for New Listing Applicants repeatedly states that many examples were non-exhaustive, making assessments for eligibility a case-by-case exercise, particularly as many of the firms that would use TECH may be developing unfamiliar technologies. “TECH is an important communication channel,” Chan said “through which potential applicants can clarify their queries with HKEX in detail.”
Chan continued that other than this initial guidance, the IPO process remains the same. After enquiring via the channel, firms hope to have more clarity before meeting with the listing division and submitting pre-IPO enquiries. TECH helps these companies clarify the applicable listing rules before a new listing application is submitted.