PwC floats expanded confidential IPO filing to attract firms

Hong Kong should expand the scope of confidential filing to companies with a large market capitalization and rapid growth to further boost the city’s stock market, PricewaterhouseCoopers said, in proposals for Chief Executive John Lee Ka-chiu's upcoming policy address.

Hong Kong Exchanges and Clearing (0388) currently allows some companies not to disclose their initial public offering prospectus before passing their hearing. These include those who specialize in certain technologies and biotech, those that have been listed in a recognized overseas exchange, and those that seek a secondary listing on a qualifying bourse.

In July, Chinese fast fashion retailer Shein was reported to have confidentially filed for a listing in Hong Kong after failing to get approval for its London debut from the mainland regulator.

An expansion to large corporates and secondary listing will help attract more innovative companies to Hong Kong, as major markets such as the United States have allowed confidential filing for some years, according to Eddie Wong, capital market services partner at PwC.

Wong made no comment regarding the questioned qualification of Shein, but said it is appropriate for HKEX to remain flexible for some cases.

Moreover, he proposed a phased implementation of IPO Connect, a cross-border investment scheme similar to the existing stock edition that links mainland and overseas investors, with an initial trial involving companies in the Greater Bay Area.

To attract overseas issuers, HKEX should expand guidance on listing requirements and shareholder protection standards to those in the Middle East and Southeast Asia, Wong said.

He revealed that PwC had received many IPO-related inquiries from overseas clients and suggests HKEX act more proactively, including offering assistance to potential issuers to help them in preparation.

In addition, PwC China’s vice chair and managing director Charles Lee urges Hong Kong to enrich investable assets such as  bonds and yuan-denominated products first, before extending trading hours as proposed by other market stakeholders.

“We need to have something on hand for sale first. Otherwise, the longer trading hours will not work much,” Lee said.

Deloitte suggested on Monday to prolong the stock exchange’s trading hours in phases to 24 hours to keep pace with some overseas bourses.

THEMIS QI