Chinese bottled water and beverage company Nongfu Spring completed its US$1.08 billion IPO in Hong Kong on 8 September, becoming the most oversubscribed offering to date on the city bourse, after its retail tranche was covered 1,148 times.
Nongfu Spring also became the first company to achieve “full tradability” of H-shares on listing.
The China Securities Regulatory Commission (CSRC) had announced the full tradability system in November last year, which allowed unlisted shares held by mainland Chinese companies to be sold and traded on the Hong Kong Stock Exchange.
“The full tradability of H shares has complemented the shortcoming of the original H-share listings policies, providing more exit options for the domestic shareholders of Hong Kong-listed companies,” said Andrew Ling, a partner at Jingtian & Gongcheng based in Beijing. “This move will also encourage more domestic enterprises to list in Hong Kong.”
Fu Siqi, a Beijing-based partner at Tian Yuan Law Firm, said: “For enterprises, the full tradability reform aligns the interests of all shareholders and improves corporate governance. It can also help domestic companies to utilize both domestic and Hong Kong capital markets better.”
Foreign exchange management and tax regulation were so far the main difficulties for Hong Kong-listed companies to achieve full tradability, said Fu.
Ling advised Chinese legal counsel to “refer to the Guidelines for the Application by H-share Companies for Full Tradability of their Domestic Unlisted Shares, issued by the CSRC, and fully discuss the listing details with departments such as the CSRC, China Securities Depository and Clearing Corporation, and its Hong Kong subsidiary, the Hong Kong Central Clearing Company”.
Jingtian & Gongcheng was the Chinese legal adviser to the company, while Freshfields acted as Hong Kong and US legal counsel.
Tian Yuan Law Firm was the China legal counsel for the joint sponsors and underwriters, while Clifford Chance served as the global legal counsel.
The stock’s steady gains post-listing pushed company founder Zhong Shanshan’s net worth to US$57.2 billion on 24 September, making him, briefly, the richest man in China.