HK May Bar Tycoons as Cornerstone IPO Investors
Hong Kong regulators may ban the practice of tycoons buying into initial public offerings as so-called "cornerstone" investors after criticism that the practice is unfair to ordinary investors, the South China Morning Post reported on Wednesday.
Billionaires including Li Ka-shing and Lee Shau Kee often buy blocks of stock in big IPOs, and are typically required to hold those stakes for a period of six months or more.
The presence of such high-profile players often drives demand from retail investors, ensuring strong subscription levels, while the lock-up commitments add stability once shares begin trading.
Hong Kong Exchanges and Clearing Chairman Paul Chow said the question of whether to restrict cornerstone investors would be discussed in a consultation paper to be issued this quarter, the newspaper said.
China Railway Group and Alibaba.com were among the firms whose big IPOs last year included cornerstone investors.
"There are concerns that the practice of cornerstone investor placements may be a form of unequal treatment," the newspaper quoted Low Chee Keong, a member of the stock exchange's listing committee, as saying.
"In some cases, almost 10 percent of an offering is in the hands of these investors, cutting the chance of individual investors being allotted shares."