Hong Kong crypto exchange gains listing through the back door
Chinese cryptocurrency exchange Huobi has gained a stock market listing following a reverse takeover of Hong Kong-based electronics investment company Pantronics Holdings.
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.
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.”