Hong Kong seen emerging as IPO hub for fintechs, as Chinese firms shun US markets amid rising tension

Hong Kong is fast becoming the go-to fundraising hub for Chinese fintech companies, as the city benefits from the US market’s waning appeal for Chinese issuers amid an ongoing spat between Washington and Beijing, said a top official of payments service provider Yeahka, which made a successful market debut on Monday.

Helen Zhou, chief strategy officer of the Shenzhen-based company, said that Hong Kong still maintains a lead over China in attracting international capital, attributing the strong demand for its initial public offering to the city’s wide institutional investor base.

“These leading European and US investors are already very familiar with the internet, payment and technology sectors, so it didn’t take long for them to understand our business model,” said Zhou on the sidelines of a reception for investors in Hong Kong, after the stock exchange cancelled all listing ceremonies in light of the coronavirus pandemic.

Yeahka’s Hong Kong IPO was over 600 times oversubscribed while the international tranche was oversubscribed 12 times, following subscriptions from Fidelity International, Hillhouse Capital, BlackRock, HSBC and UBS, said Zhou, who oversees new business opportunities at the firm.

Helen Zhou, chief strategy officer of Yeahka, says the company’s IPO was extremely well-received in Hong Kong. Photo: K.Y. Cheng alt=Helen Zhou, chief strategy officer of Yeahka, says the company’s IPO was extremely well-received in Hong Kong. Photo: K.Y. Cheng

The company priced its IPO at HK$16.64, the top end of its price range, raising HK$1.53 billion (US$197.3 million). The stock closed at HK$17.66 on Monday, 6 per cent higher than its offer price.

Zhou said that the decision of other Chinese tech giants, such as Alibaba Holdings to list in Hong Kong, and the proposed IPOs of JD.com and NetEase later this month, has underlined the stock exchange’s gradual transformation into a technology listing hub. Alibaba, the owner of this newspaper, completed its US$12.9 billion IPOs secondary listing last November.

US-listed Chinese issuers’ plan to seek secondary listings in Hong Kong could be expedited this year, after President Donald Trump last week vowed to revoke the city’s special trading status after Beijing’s proposed plan to pass the national security laws in Hong Kong, some bankers have said.

Backed by social media giant Tencent, which owns about 3 per cent in Yeahka, the firm reported its maiden net profit of 84.7 million yuan (US$11.9 million) in 2019 compared to a net loss of 182.8 million yuan a year earlier.

Yeahka today supports mobile payments from over 500 e-wallet providers. Its targets primarily small and micro-merchants that receive mobile payment from multiple bank card issuers and e-wallet providers through its software and fintech services.

Zhou said as the People’s Bank of China prepares to fully roll out is digital renminbi nationwide, Yeahka will also support the merchants on its platform by enabling them to accept payment using the central bank digital currency. Mainland media reported in April that the PBOC’s digital currency was being tested in Suzhou, Shenzhen, Xiong’an New Area and Chengdu. She however did not elaborate further.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

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