Hong Kong crypto exchange gains listing through the back door

August 28, 2018
Chris Wheal

Chinese cryptocurrency exchange Huobi has gained a stock market listing following a reverse takeover of Hong Kong-based electronics investment company Pantronics Holdings.

Huobi exchange gains its own listing in Hong Kong through a reverse takeover

Also sometimes known as a “backdoor” listing, Huobi acquired a 73.7% stake in Pantronics, leaving the privately-held company the controlling interest in the public company and its listing on the Hong Kong exchange.

No IPO necessary

The move means Huobi gains Pantronics’ listing, avoiding such necessary problems of a more traditional route through an initial public offering (IPO).

Pantronics was obliged to halt trading of its shares on the Hong Kong exchange on 22 August under exchange rule 26, as it became aware of a pending offer. Shares in Pantronics were stopped at HK$3.08.

The combined entity has yet to offer financial details of its intended listing price, and what investors in Pantronics can expect from the deal.

Backdoor listings

While many exchanges frown on backdoor listings, few have introduced rules to ban them. On 30 July, Caixin, a local media group, reported that the Hong Kong exchange was preparing a revision its rules to improve the quality of listed companies and clean up the market.

The exchange’s chief regulatory officer David Graham, said: “We essentially allow a backdoor listing. But what [we want] to ensure is that when this happens, the quality of the assets and the ultimate combined company to be listed on our exchange have been through an appropriate due diligence and vetting process.”

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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