HKEX(HK:00388) Zheng Quan Shi Bao Wang·2025-08-01 10:23Core Viewpoint - Hong Kong Exchanges and Clearing Limited (HKEX) aims to enhance the pricing and allocation mechanisms for initial public offerings (IPOs) to maintain its competitiveness and attract a new generation of quality companies to list in Hong Kong [1][7]. Summary by Sections IPO Pricing and Allocation Mechanism - The minimum allocation to the bookbuilding portion of an IPO has been reduced from 50% to 40% [2]. - Two allocation mechanisms are introduced for new listing applicants: - Mechanism A allows for a designated allocation percentage based on the oversubscription ratio, with maximum allocation to the public offering portion increased from 20% to 35% [2][10]. - Mechanism B requires issuers to pre-select a fixed allocation percentage for the public offering, ranging from 10% to 60%, without a replenishment mechanism [3][10]. Initial Public Holding and Free Float Requirements - New minimum public holding and free float requirements have been established for issuers at the time of listing, with specific thresholds based on market capitalization [4][12]. - The new regulations will take effect on August 4, 2025, and will apply to all new listing applicants [5][12]. Rationale for Changes - The existing IPO pricing mechanism has not been updated for 27 years, despite significant changes in the market and investor demographics [7][8]. - The reforms aim to create a more flexible, clear, and transparent framework for issuers and investors, reflecting the increased participation of institutional investors [9][10]. Continuous Public Holding Requirements - Further consultations will be conducted regarding the continuous public holding requirements, with a proposal to introduce a tiered system based on market capitalization to provide clearer guidance for companies [11][12]. - The current requirement of 25% for continuous public holding is deemed inflexible, especially for larger companies [11]. Overall Market Context - The Hong Kong IPO market is currently very active, with a record number of applications in process, indicating a strong demand for the proposed reforms [10].