Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – Cornerstone Investors.

3 May, 2013


Legal News & Analysis – Asia Pacific – Hong Kong – Capital Markets


Cornerstone investments continue to play a key part in Hong Kong IPOs. Cornerstone investors are introduced to an IPO to demonstrate to the market and other investors that these investors have confidence in the listing applicant. The cornerstone investors are guaranteed to receive a specific allocation of shares in the IPO irrespective of the offer price. In 2012, the Hong Kong Stock Exchange noted that cornerstone placings ranged between 6% and 66% of the total offering size for new listings. In 2011, the range was between 9% and 76%.


Recently, the Exchange has issued a guidance letter (GL51-13) confirming its guiding principles for cornerstone placings, which include: (i) that the placing must be at the IPO price; (ii) that the cornerstone investors will be subject to a lock-up period of at least six months following the listing date; and (iii) that each cornerstone investor will not have any board representation in the listing applicant.


The Exchange further reminded the market that cornerstone investors should not be given any direct or indirect benefits save for the guaranteed allocation of shares at the IPO price. Any other form of direct or indirect benefits may result in such investors being treated as pre-IPO investors. For pre-IPO investments, the exchange will generally require, except in very exceptional circumstances, that the investment must be completed either at least 28 days before the first submission of the listing application or at least 180 days before the listing date.


Investors considering participating in Hong Kong IPOs should take note of the above.



For further information, please contact:

Tommy Tong, Partner, Herbert Smith Freehills

[email protected]


Victor Ding, Herbert Smith Freehills

[email protected]


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