It is over four months after the last nod to an applicant with a similar structure, the vetting of which was rumoured to tighten in a bid to prevent asset outflows.Momenta Global Limited, an entity the start-up used to apply for an initial public offering (IPO) in Hong Kong, is incorporated in the Cayman Islands with limited liability, according to the prospectus released today.Momenta got the approval from the China Securities Regulatory Commission (CSRC) last week and passed the hearing of Hong Kong’s stock exchange today. The start-up was reported to have made a confidential application to the city’s bourse in late March.A company that operates a business in mainland China and applies to go public with an offshore entity is known as a “red-chip”, a tactic which has been used by Chinese firms in foreign investment-restricted sectors to bypass the domestic regulations and maintain flexibility over the past two decades.Momenta’s approval comes amid concern from the Chinese financial sector over whether CSRC had tightened overseas listing rules, after some red-chip companies seeking regulatory approval for an IPO in the city were asked to change their structure, according to a memo seen by the South China Morning Post.Instead, the red-chip firms were urged to issue Hong Kong-traded shares, also known as H shares, the memo showed.
Chinese ‘red-chip’ start-up granted regulatory approval amid rumoured crackdown
As Beijing appears to tighten rules on firms incorporated offshore being listed in Hong Kong, self-driving tech start-up Momenta gains IPO.
TL;DRAI
Momenta won CSRC approval for a Hong Kong IPO as a red-chip entity—the first in four months—amid regulator scrutiny on offshore structures to prevent capital outflows. Beijing tolerates cross-border tech IPOs but is narrowing the red-chip pathway, favoring H-shares.
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