Hong Kong bourse proposes to create a new channel to listing for “Specialist Technology Companies”

Specialist Technology Industries

Acceptable sectors

Next-generation information technology

(i) cloud-based services; and (ii) artificial intelligence

Advanced hardware

(i) robotics and automation; (ii) semiconductors; (iii) advanced communication technology; (iv) electric and autonomous vehicles; (v) advanced transportation technology; (vi) aerospace technology; (vii) advanced manufacturing; (viii) quantum computing; and (ix) metaverse technology

Advanced materials

(i) synthetic biological materials; (ii) smart glass; and (iii) nanomaterials

New energy and environmental protection

(i) new energy generation; (ii) new energy storage and transmission technology; and (iii) new green technology

New food and agriculture technologies

(i) new food technology; and (ii) new agriculture technology

COMMERCIAL COMPANIES

PRE-COMMERCIAL COMPANIES

QUALIFICATIONS FOR LISTING

Expected market capitalisation at the time of listing

≥ HK$8 billion

≥ HK$15 billion

Revenue

Commercialisation Revenue Threshold

N/A

R&D

Engaged in R&D for ≥ three financial years

R&D investment constitutes ≥ 15% of total operating expenditure for each of the three financial years prior to listing

R&D investment constitutes ≥ 50% of total operating expenditure for each of the three financial years prior to listing

Operational track record

≥ three financial years of operation under substantially the same management
prior to listing

Meaningful investment from “Sophisticated Independent Investors”

The listing applicant must have received “meaningful investment” from “Sophisticated Independent Investors“ (i.e. sophisticated investors who meet certain indicative size thresholds or qualification requirement, and who are not core connected persons of the listing applicant (excluding a person being connected only by virtue of being a substantial shareholder)).

As an indicative benchmark, an applicant meeting the following requirements will generally be considered as having received “meaningful investment”:

• investment from ≥ two Sophisticated Independent Investors at least 12 months prior to the date of the listing application, each holding such amount of shares or securities convertible into shares equivalent to ≥ 5% of the issued share capital of the applicant as at the date of listing application and throughout the pre-application 12-month period (Pathfinder SIIs); and
• at least the following aggregate investment from all Sophisticated Independent Investors as at the time of listing of:

Path to commercialisation

N/A

• Demonstrate, and disclose in its listing document, a credible path to achieving the Commercialisation Revenue Threshold.
• Have available working capital (including the expected IPO proceeds) to cover ≥ 125% of its group’s costs (which must substantially consist of general, administrative and operating costs and R&D costs) for at least the next 12 months.

IPO REQUIREMENTS

More robust price discovery process

• Allocate ≥ 50% of the total number of shares offered in IPO to institutional professional investors (i.e. persons falling under paragraphs (a) to (i) of the definition of “professional investor” in Section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance) that participate in the placing tranche of an IPO (whether as cornerstone investor or otherwise), excluding existing shareholders and any of their close associates, and core connected persons of the applicant (Independent Institutional Investors).

Notes:

1. This proposed requirement would also apply to a Specialist Technology Company listing by way of a De-SPAC Transaction. That means, ≥ 50% of the total number of shares issued by the Successor Company as part of the De-SPAC Transaction (excluding any shares issued to the existing shareholders of the De-SPAC Target as consideration for acquiring the De-SPAC Target) would need to be taken up by Independent Institutional Investors.
2. In the case of a Specialist Technology Company seeking to list by introduction, the Exchange will consider granting waivers, on a case-by-case basis, from this proposed requirement. The applicant must demonstrate that it is expected to meet the applicable minimum market capitalisation at the time of listing set out above, having regard to its historical trading price (for at least a six-month period) on a Recognised Stock Exchange with sufficient liquidity and a large investor base (a substantial portion of which are Independent Institutional Investors).

• Revised initial allocation and clawback mechanism as shown below will apply:

Free float upon listing
(i.e. shares not subject to any disposal restrictions)

≥ HK$600 million

Offer size

The Exchange would expect the listing of a Specialist Technology Company to be accompanied by an offer (including both the placing tranche and the public subscription tranche) of a meaningful size and it reserves the right not to approve the listing if the offer size is not significant enough to facilitate post-listing liquidity, or otherwise gives rise to orderly market concerns.

Additional disclosure requirements in the listing document

• Additional disclosure requirement to facilitate IPO investors’ assessment of a Specialist Technology Company, including: (a) pre-IPO investments and cash flows; (b) products and commercialisation status and prospects; (c) R&D; (d) industry specific information; and (e) intellectual property.
• A warning statement that the applicant is a Specialist Technology Company and so investment in its securities carries additional risks.

N/A

• Disclose key stages and milestones for its Specialist Technology Product(s) to achieve the Commercialisation Revenue Threshold.
• Warning statement should also draw investors’ attention to the risk that the company may not generate sufficient revenue to sustain its operations after listing and that it may fail due to a lack of available funds.

POST-IPO REQUIREMENTS

Lock-up

Continuing obligations until achieving the Commercialisation Revenue Threshold

N/A

• Additional disclosure in the interim and annual reports including the timeframe for, and any progress made towards, the issuer achieving the Commercialisation Revenue Threshold; and updates on any revenue, profit and other business and financial estimates as provided in the listing document (and any subsequent updates to those estimates as published by the Pre-Commercial Company).
• Shortened remedial period of 12 months (rather than the usual 18 months) for re-compliance with the sufficiency of operations requirement before delisting.
• Restricted from effecting any transaction that would constitute a material change of business without the prior consent of the Exchange.
• Identified through the stock marker “PC”.