Strategic measures by Hong Kong to draw in tech and biotech companies for Initial Public Offerings (IPOs)
Hong Kong Unveils New Initiatives to Boost IPOs for Tech and Biotech Companies
Hong Kong has announced a series of new initiatives aimed at making the city a global hub for initial public offerings (IPOs) in the advanced technology and biotech sectors. The most notable of these initiatives is the launch of the Technology Enterprises Channel (TECH), a dedicated platform designed to streamline the IPO listing process for specialist technology and biotech companies.
The TECH channel is part of a broader set of reforms, including the upcoming Uncertificated Securities Market (USM) regime, scheduled for 2026. These reforms aim to digitize securities and improve operational efficiency for issuers, including those listed via TECH.
The new measures are expected to enhance market quality and transparency, supporting the growth of Hong Kong’s new economy ecosystem. For specialist technology and biotech companies, the benefits include a streamlined and more efficient pathway for listing on the Hong Kong Exchange, tailored to the unique characteristics and needs of these firms.
Fostering greater transparency and market quality in IPO applications is another key advantage. This could lead to higher investor confidence and smoother regulatory review, aligned with the sector’s innovation and research and development (R&D)-driven nature.
The SEHK has provided prescriptive guidelines on R&D requirements for both biotech and specialist technology companies. Under the new initiatives, applicants are relieved from demonstrating all Specific WVR Requirements, but some remain because similar requirements also apply under Chapters 18A or 18C.
For specialist technology companies, there is no requirement for external validation through third-party investments, but specific investment amounts and investor numbers are required. For biotech companies, there is no requirement for market capitalization or intangible asset value to be outsized relative to tangible asset value.
The Lock Up requirement, where investors must retain an aggregate 50% of their investment for a period of at least six months post-IPO, applies only if the applicant will rely on the measure. The introduction of the TECH, along with a confidential filing and streamlined processes for applicants with WVR, highlights the SFC's and the SEHK's dedication to supporting IPOs of high-quality tech enterprises.
Specialist technology companies under MBLR Chapter 18C have Innovative Company Requirements that involve being primarily engaged in R&D of specialist technology products and having developed at least one core product beyond the concept stage. Biotech companies under MBLR Chapter 18A have Innovative Company Requirements that involve demonstrating success attributable to new technologies, innovations, or a new business model that differentiates them from other players.
Applicants who meet the regulatory requirements under Chapters 18A (for biotech companies) or 18C (for specialist technology companies) of the SEHK's Main Board Listing Rules are presumed to have satisfied the Specific WVR Requirements. However, it's important to note that applicants are not required to demonstrate IP ownership, but clearer IP requirements apply for specialist technology companies.
In conclusion, these new initiatives in Hong Kong are designed to position the city as a leading global IPO hub for advanced technology and biotech sectors by catering to their specific business and regulatory profiles. Specialist technology and biotech companies considering a listing in Hong Kong are encouraged to explore these new opportunities and engage with the SEHK for tailored guidance and support.
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