The IPO rules guarantee institutional investors 40 per cent of the offering, while leaving as little as 10 per cent for retail investors
Hong Kong Exchanges and Clearing’s (HKEX) latest listing rules on distributing shares in popular initial public offerings (IPOs) are expected to draw more institutional investors and family offices but curb retail participation, according to industry players.
The rules, which came into effect on August 4, mandate that IPO candidates allocate at least 40 per cent of the shares to institutional investors involved in bookbuilding – up from no guaranteed allocation previously.
The rules have reduced the number of shares retail investors can get from the so-called clawback mechanism to 35 per cent of an IPO, down from 50 per cent previously in the event of a heavily oversubscribed offer. The rules also allow companies to not offer clawbacks at all, as long as they offer 10 per cent of the shares to retail investors.
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