Top Biz News

Financial service firms target SMEs to list in Hong Kong

By Lillian Liu (China Daily)
Updated: 2006-08-11 09:13

HONG KONG: Local financial service providers are stepping up efforts to tap small- and medium-sized enterprises (SME) from the mainland looking to list in this special administrative region.

The move comes as most big companies have already traded their shares in Hong Kong. SMEs could be the target of the next round of competition, analysts said.

Lau & Au Yeung C.P.A. Ltd, an accounting firm, said it has hired a part-time putonghua teacher to teach its staff the language. Putonghua is the spoken Chinese used by the mainland, while Hongkongers mainly speak Cantonese, a dialect popular in South China's Guangdong Province.

"If you want to talk with mainland SMEs, you have to speak putonghua. It's not like with big companies, whose executives can speak good English," said Danny Chan, head of the company.

"And our employees are willing to learn ... they know it's for the good of their career," Chan said.

The company helps mainland firms with legal matters related to their listings.

M.A.T. Accounting Consultant Co, a Hong Kong-based financial service provider, also said it will organize more trips to the mainland to communicate with small IPO (initial public offering) candidates.

It said it welcomed smaller mainland firms since most of them come up with "short-term contracts," which are easier to handle.

"Enterprises with a smaller scale require less work and a shorter procedure. They are our targets," said Stephen Mak, a manager at the firm.

Anglo Chinese Corporate Finance Ltd, which has sponsored the listings of some mainland firms, said it would expand its scope in searching for IPO candidates, focusing on private firms in East and South China.

SMEs will be the next big thing in Hong Kong's IPO market, said Andes Cheng, associate director of South China Research Ltd.

"With the giants listed, a group of fast-growing and cash-starved smaller firms will seek to list in Hong Kong," he said.

Playing a role in the mega-IPOs of behemoths such as Bank of China (BOC) and China Construction Bank (CCB) does produce fat returns, said Cheng.

"But how many BOCs and CCBs do we have?" he said. "And how many of the local financial houses can really get a role in these deals?"

Therefore it's very natural for them to cast their nets to SMEs.

"I believe there are still lots of good quality enterprises who want to go public in Hong Kong, and some medium-size companies seem to have very good potential," said K. K. Yeung, chairman of KK Yeung Management, a 23-year-old management consulting firm.

Of these firms, Yeung said, mainland companies with foreign trade experience are the best candidates.

"Companies with international trade experience tend to have wider horizons and understand how listing companies should perform," said Yeung.