HONG KONG: The Hong Kong stock exchange has rejected the IPO application of AMTD Strategic Capital Group [IPO-AMTD.HK], a corporate insurance broker backed by Morgan Stanley’s private equity arm. It becomes only the sixth company to fall foul of Hong Kong stock listing regulations in nearly four years. The Hong Kong company, controlled by AMTD Asia, filed in May for the IPO, which Thomson Reuters publication IFR said could total $200 million. The application was rejected on June 5, according to a Hong Kong stock exchange decision dated July 21.
Hong Kong introduced stricter listing rules in 2014 to improve the quality of listings but the exchange did not say why it had rejected AMTD’s application. AMTD Strategic Capital is 79 percent owned by AMTD Asia, which in turn is owned by Morgan Stanley Private Equity Asia (MSPEA), asset management firm L.R. Capital Group and China Minsheng Investment Corp, China’s largest privately owned investment company. China Everbright Capital Ltd and China Merchants Securities had been hired as joint sponsors of the IPO, according to the IPO prospectus. Under Hong Kong’s tightened rules, the regulator names IPO sponsors and issuers whose applications are incomplete and bans them from refiling the documents for eight weeks.
Banks are also criminally liable if an IPO prospectus is found to have misled investors. AMTD Strategic Capital has raised $34 million this year alone in funds for business expansion, from seven investors, according its IPO prospectus. They included Morgan Stanley’s private equity arm, an investment holding company linked to the co-founder of Meitu Inc (1357.HK), an affiliate of Sohu.com Inc (SOHU.O) and real estate development firm Indochina Capital.