Hong Kong Exchange Launches New Specialist Technology Company Listing Rules, Minimum of $760 Million Market Capitalization for Companies with at Least $31.8 Million Revenue & $1.27 Billion Market Capitalization with Less Than $31.8 Million Revenue
25th March 2023 | Hong Kong
Hong Kong Exchange (HKEX) has launched a new specialist technology company listing rules effective 31st March 2023 (IPO, Raise Capital), with a minimum of $760 million (HKD 6 billion) market capitalization for companies with at least $31.8 million (HKD 250 million) revenue and minimum $1.27 billion (HKD 10 billion) market capitalization with less than $31.8 million revenue (HKD 250 million). HKEX: “A Specialist Technology Company is a company primarily engaged in the research and development of, and the commercialisation &/or sales of, products &/or services that apply science and/or technology within an acceptable sector of a Specialist Technology Industry”. The Hong Kong Exchange had received 90 non-duplicate responses to the consultation on the new chapter from a broad range of respondents, including investment firms, professional bodies, prospective listing applicants, corporate finance firms and individuals. The Consultation Conclusions and copies of the respondents’ submissions are available to view on the HKEX website. See below for the new HKEX Specialist Technology Company Listing Rules:
“ Hong Kong Exchange Launches New Specialist Technology Company Listing Rules, Minimum of $760 Million Market Capitalization for Companies with at Least $31.8 Million Revenue & $1.27 Billion Market Capitalization with Less Than $31.8 Million Revenue “
HKEX Chief Executive Officer, Nicolas Aguzin: “This is an exciting new development for Hong Kong’s equity markets. The new economy sector is rapidly changing the way in which we live and work, and this new route to market will support some of the most innovative and progressive companies of the future. At HKEX, we are committed to continuously supporting the needs of issuers and investors and this further builds on our 2018 listing reforms, which amongst other things, swiftly established Hong Kong as Asia’s premier biotechnology fundraising market. This new Specialist Technology chapter will support even more companies as they access capital to fund innovative ideas and growth. We would like to thank all those that provided feedback as this new route to market was drawn up, providing critical support as we take another step forward in shaping Hong Kong as the marketplace of the future.”
HKEX Head of Listing, Katherine Ng: “Although we received majority support for most of our proposals, we have made some adjustments to the new Rules, reflecting market feedback, whilst continuing to ensure that our regulatory intentions remain undiminished.”
New HKEX Specialist Technology Company Listing Rules
New HKEX Specialist Technology Company Listing Rules:
Market capitalisation
- Commercial Companies: ≥ HK$6 billion
- Pre-Commercial Companies: ≥ HK$10 billion
Minimum R&D expenditure ratio threshold
• Threshold lowered to ≥ 30% for Pre-Commercial Companies with revenue ≥ HK$150 million but <HK$250 million
Period of application
• Require the ratio to be met: (a) on a yearly basis for at least two of the three financial years prior to listing; and (b) on an aggregate basis over all three financial years prior to listing
Indicative benchmark for the investment from Pathfinder SII
• Two to five Pathfinder SIIs that:
1) in aggregate hold ≥ 10% of an applicant’s issued share capital as at the date of listing application and throughout the pre-application 12-month period; or
2) otherwise have invested an aggregate sum of ≥ HK$1.5 billion in the applicant at least 12 months prior to the date of listing application (excluding any subsequent divestments made on or before the date of the listing application);
• Provided that at least two such Pathfinder SIIs:
1) each hold ≥ 3% of an applicant’s issued share capital as at the date of listing application and throughout the pre-application 12-month period; or
2) otherwise each have invested ≥ HK$450 million in the applicant at least 12 months prior to the date of listing application (excluding any subsequent divestments made on or before the date of the listing application).
Optimised price discovery process
- Require ≥ 50% of offer shares to be taken up by “Independent Price Setting Investors”
- Define “Independent Price Setting Investors” to comprise (i) Institutional Professional Investors; and (ii) other types of investors with AUM, fund size or investment portfolio size of at least HK$1 billion that satisfy the same independence requirement
Notes:
- A Specialist Technology Company is a company primarily engaged in the research and development of, and the commercialisation and/or sales of, products and/or services that apply science and/or technology within an acceptable sector of a Specialist Technology Industry (Specialist Technology Products). The list of Specialist Technology Industries and the respective acceptable sectors are set out in a guidance letter (see Appendix V of the Consultation Conclusions) which will take effect on the same date as the new Rules, and will be updated from time to time.
- A Commercial Company means a Specialist Technology Company that has revenue of at least HK$250 million for its most recent audited financial year (Commercialisation Revenue Threshold).
- A Pre-Commercial Company means a Specialist Technology Company which has not yet met the Commercialisation Revenue Threshold at the time of listing.
- The R&D expenditure ratio is calculated as the total amount of an applicant’s expenditure on the R&D of its Specialist Technology Product(s) incurred for the relevant period, divided by its total operating expenditure for the same period.
- The independence requirement and indicative size thresholds or qualification requirements for a SII are set out in the guidance letter (see Appendix V of the Consultation Conclusions).
- Pathfinder SIIs mean SIIs that have invested at least 12 months before the date of the listing application of a Specialist Technology Company.
- Institutional Professional Investors are persons falling under paragraphs (a) to (i) of the definition of “professional investor” in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong).
- A person will not be considered independent, for the purpose of this requirement, if it is (a) an existing shareholder of the applicant, or a close associate of an existing shareholder; or (b) a core connected person of the applicant.
About HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is a publicly-traded company (HKEX Stock Code:388) and one of the world’s leading global exchange groups, offering a range of equity, derivative, commodity, fixed income and other financial markets, products and services, including the London Metal Exchange. As a superconnector and gateway between East and West, HKEX facilitates the two-way flow of capital, ideas and dialogue between China and the rest of the world, through its pioneering Connect schemes, increasingly diversified product ecosystem and its deep, liquid and international markets. HKEX is a purpose-led organisation which, across its business and through the work of HKEX Foundation, seeks to connect, promote and progress its markets and the communities it supports for the prosperity of all. Visit: www.hkexgroup.com
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