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Friday, April 14, 2017, 09:59

Infrastructure developers seek Hong Kong listings

By Duan Ting in Hong Kong

More infrastructure developers are expected to seek listings in Hong Kong and regulators will revise rules to ensure quality and improve the chances of successful initial public offerings, experts said.

Eddie Wong, capital markets services partner at PwC Hong Kong, said new regulations by the Securities and Futures Commission were designed to reduce risk and improve the quality and listing potential for the infrastructure companies, and to protect the market.

Wong said they have seen more infrastructure project companies interested in listing in Hong Kong which had turned to them for listing inquires in the past three years.

He believed that under the Belt and Road Initiative more infrastructure companies would seek a listing in Hong Kong.

Wong added he expected regulators to come up with more detailed rules to attract infrastructure developers to list in Hong Kong, as the current requirements for these companies were unattractive.

He could not see any of these companies listing under the present rules and added that infrastructure companies still comprised a small percentage of Hong Kong's capital market.

The SFC said on Wednesday that several factors have to be taken into account when assessing proposed listings in Hong Kong of infrastructure project companies, since infrastructure projects gave rise to special risks.

The SFC said it would consider several factors which would mitigate such risks.

The commission said factors for a successful listing included a company having a large shareholding by a relevant mainland State-owned enterprises.

Others included whether there is a sizable mainland development or international bank committed to providing ongoing project finance and whether there is direct involvement or shareholding by a relevant state government.

Ashley Alder, SFC's chief executive, said: "Hong Kong's international profile and reputation as a venue for capital raising has put it in an excellent position to take advantage of the opportunities presented by the Belt and Road Initiative."

The Hong Kong Exchanges and Clearing also welcomed the SFC's statement on listing issues and Chief Executive Charles Li Xiaojia said they would continue to work with the SFC to strengthen the role of Hong Kong as a premier capital raising center, while maintaining their high standards.

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