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May 01, 2019

Hong Kong exchange sees benefits of introducing dual-class shares

Nine biotech companies join Hong Kong bourse, raising combined $3.8 bn

The introduction of dual-class share listings on the Stock Exchange of Hong Kong last April, designed to make the exchange a hub for technology and biotech firms, has come to fruition.

A year on from the changes, nine biotech companies have joined the Hong Kong exchange, raising a combined $3.8 bn by IPO, making Hong Kong the second-largest public biotech hub worldwide after leader Nasdaq, according to Refinitiv data. Over the same period, Nasdaq welcomed 57 new biotech firms, raising a combined $5.97 bn – half the global market.

The Hong Kong reforms have attracted some big tech names: smartphone giant Xiaomi raised $5.43 bn in July when it became the first dual-class shareholding company to list, while online food delivery service Meituan-Dianping raised $4.2 bn in its massive IPO last September.

Hong Kong also had six out of the top 10 biotech IPOs worldwide last year, including the top two: Shanghai medical tech platform WuXi AppTec, which raised $1.06 bn, and cancer drug developer BeiGene, which raised $902 mn.

The bad news is that most of the newly listed companies have seen their share price fall since their IPO as the stock market took something of a hit from the US-China trade war and a slowing Chinese economy. Meituan-Dianping, for example, is down 20 percent from its debut price, while Ascletis Pharma, which raised $400 mn in its IPO, has fallen by more than half.

The good news now is that the pace of listings is not stopping as a result of the market falls. The latest IPO in the pipeline is leading contract drug researcher Viva Biotech, which is looking to raise between HK$1.18 bn and HK$1.52 bn ($150 mn to $194 mn). Established in 2008, Viva provides structure-based drug-discovery services to biotechnology and pharmaceutical customers. Its stock will debut on Hong Kong’s exchange on May 9.