In February 2021, the Securities and Future Commission (SFC) of Hong Kong issues a consultation paper, which, if enacted, would have a far-reaching impact on the way in which public offerings of equity and debt securities are made in Hong Kong.
In particular, the consultation paper seeks to address, among others, the following inadequacies identified by the Commission: the lack of a transparent and robust price discovery process through bookbuilding by intermediaries, the lack of alignment between the sponsor’s incentives and liabilities, and the lack of specific requirements government the conduct of bookbuilding and placing activities, whether in equity capital markets (ECM) or debt capital markets (DCM).
Authors: Richard Mazzochi, Partner, and Sheldon Tse, Partner, King & Wood Mallesons