Hong Kong’s IPO market, the biggest in the world in 2009, has lost momentum, in recent months, with several companies shelving their IPOs due to a lack of investor interest.

The month of May saw two major Hong Kong IPOs being shelved – Swire Pacific pulled its US$2.7bn plan to spin-off its property unit and Giti Tyre, the largest tyre manufacturer in China, also decided to holdoff on its US$500m offering despite it being its second attempt to get its IPO off the ground. In June, Chinese wind-turbine maker Xinjiang Goldwind Science & Technology also decided to shelve its US$1.2bn offering because of volatile market conditions. 

Nevertheless, lawyers are confirming to rackup billable hours – across different practice areas – advising clients on pre-IPO and IPO related matters during the wait for more clement market conditions.

“In this time, clients will usually seek out other business endeavours like acquiring smaller competitors or make pre-IPO investments to build their business portfolio so as to better qualify in the future,” said Wayne Chen, partner and head of capital markets at Llinks.

DLA Piper’s Esther Leung, partner and co-head of the Asia capital markets team, agrees that a delayed IPO actually increases the client's need for legal services. “When clients finally decide to list, we need to update respective prospectuses. There are also a lot more documents to execute if a new listing hearing is required,” she said. ALB

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