Tags: saudi aramco | hong kong | ipos

WSJ: Hong Kong Could Lure 2 Landmark IPOs From US

Friday, 20 April 2018 01:52 PM

The U.S. reportedly could lose two massive initial public offerings to Hong Kong as China intends to lure more new listings.

The chief executive of Hong Kong Exchanges and Clearing Ltd. (HKEX), Charles Li, said Saudi Arabia’s state-owned oil giant, Saudi Aramco, and Chinese technology giant Xiaomi will list there as China strives to lure marquee initial public offerings (IPOs), the Journal reported.

While President Donald Trump has publicly advocated for the crown prince of Saudi Arabia to list Aramco on a U.S. exchange, such as the New York Stock Exchange (NYSE), experts have told FOX Business Network that New York may not be the best choice for Saudi Arabia because of litigation concerns arising from U.S. legislation that allows family members of 9/11 victims to sue the Saudis, Fox Business Network reported.

Aramco already controls a large refinery in Texas. It is also preparing to launch what could be the world's largest IPO and is considering listing its shares in New York among several possible exchanges, Reuters has explained.

Aramco wants to list this year. Saudi Arabia has shortlisted New York, London and Hong Kong -- singly or in a combination of two or even all three -- for the international portion of the state-owned firm's listing, sources have told Reuters.

Washington has been a long-standing political ally of Riyadh while New York offers the best liquidity of all exchanges but requires more disclosure than exchanges in London or Hong Kong.

The timeline for the IPO is still uncertain, but Saudi Arabia wants oil prices to rise to $80 a barrel to support a strong valuation for Aramco, Time magazine reported. London’s benchmark Brent crude futures traded Friday at $73.66 a barrel.

Meanwhile, Xiaomi is seeking a valuation of up to $100 billion. The Chinese smartphone and appliances maker is readying plans to list in Hong Kong as HKEX is expected to unveil major changes to its listings rules in a bid to attract more “innovative” technology companies and other IPOs with eye-popping valuations, people familiar with the matter told The Financial Times.

Hong Kong has a lot riding on expectations of a pick-up in IPOs, Reuters has expalined. The new rule changes will overturn the city’s long-held one-share-one-vote principle, ushering in the ability to weight voting rights in favor of company founders.

In theory, the changes should allow the city to better fight back against New York, its closest rival in the battle for the biggest Chinese tech listings. Many companies have to date opted for New York, including Alibaba, precisely because the United States has long allowed weighted voting rights.

“This year will definitely be a huge year for Hong Kong IPOs,” said Li Hang, head of Greater China equity capital markets at CLSA.

“There are a lot of companies that are rushing to go, or hoping to get listed as early as possible. Before, their only choice is the U.S. market, but now they are really thinking about Hong Kong.”

Among others expected to list in Hong Kong is Lufax, the online wealth management platform backed by Ping An (000001.SZ) valued at $18.5 billion in 2016.

For bankers, the prize is not simply wresting the crown of leading capital-raising center from New York again. They are also hoping investor enthusiasm for Hong Kong will increase after the territory was dominated for years by the floats of state-owned Chinese groups that few foreign fund managers were interested in.

“When you look at the current listed universe in Hong Kong, it still has an old-economy, financial bias to it. If we get a lot of volume coming through with tech-related, growth-type stocks, it should transform the market into a more interesting space with greater institutional involvement,” said David Binnion, Goldman Sachs’ head of equity capital market distribution and risk for Asia excluding Japan.

(Newsmax wire services contributed to this report).

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The U.S. reportedly could lose two massive initial public offerings (IPOs) to Hong Kong as China intends to lure more new listings.
saudi aramco, hong kong, ipos
Friday, 20 April 2018 01:52 PM
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