UBS sees ‘business as normal’ as it fights Hong Kong ban on IPO sponsorships

The 18-month duration of UBS’s suspension is longer than the six months that many bankers in Hong Kong had expected. (Reuters)
Updated 12 March 2018
0

UBS sees ‘business as normal’ as it fights Hong Kong ban on IPO sponsorships

HONG KONG: UBS has told staff that it is “business as normal,” after the Swiss bank revealed on Friday it is fighting an 18-month suspension in Hong Kong from leading initial public offerings (IPOs).
In an internal memo sent by Andrea Orcel and David Chin, global and Asia-Pacific heads of UBS’s investment bank, respectively, and seen by Reuters, the bank told staff that until its appeal was heard “we are business as normal” and that it could still sponsor IPOs.
UBS disclosed the suspension by Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), in its annual report released on Friday, and added it planned to appeal the decision as well as a HK$119 million ($15.18 million) fine handed out to it.
The bank did not specify what led to the suspension and the fine but said the regulator had been investigating UBS’s role as a sponsor of some IPOs listed on the Hong Kong Stock Exchange and that the actions related to one of the offerings under investigation.
UBS, on Monday, declined to comment on the memo.
The Swiss bank is a leading IPO bank in Hong Kong and the threat of suspension comes as the city — Asia-Pacific’s most lucrative in terms of IPO fees for international banks — is gearing up for a series of potential blockbuster floats.
Hong Kong IPOs need at least one sponsoring bank and sponsors typically lead the work — collecting a larger proportion of the fees — as the deal progresses. Any company forced to change sponsor during its IPO process — such as because of a sponsor’s suspension — must begin the whole listing process all over again, potentially adding months of work.
The 18-month duration of UBS’s suspension is longer than the six months that many bankers in Hong Kong had expected.
In the memo, UBS said that it would still be able to work on IPOs, including as a joint global coordinator — a rung lower than sponsoring — even if the proposed suspension is upheld.
The bank also told staff that it expected the full hearing of the appeal to be held in the fourth quarter of this year and a final decision to made early in 2019.
The proposed punishments stem from an investigation by the SFC into the listing of China Forestry in 2009. The company was suspended in 2011 and is now being wound down.
The China Forestry IPO was sponsored by UBS and Standard Chartered. On Friday, Hong Kong’s Securities and Futures Appeals Tribunal granted the two banks an extension for their appeals against the SFC’s actions, but did not specify the punishments.
Standard Chartered, which closed its Hong Kong equities unit in 2015, declined to comment.
UBS has been a leading sponsor of IPOs for each of the past 10 years, sponsoring 10 percent of all companies that have listed on Hong Kong’s main board over that period, according to data from Dealogic.
Since the news broke in 2016 of the SFC’s investigation into both banks, UBS’s sponsorship share has fallen to 3 percent of total main board IPOs in 2016 and 2 percent in 2017.


Abu Dhabi aims to lure start-ups with investment in new technology hub

Updated 24 March 2019
0

Abu Dhabi aims to lure start-ups with investment in new technology hub

  • The initiative will help Abu Dhabi reduce reliance on oil
  • Mubadala hopes to attract Chinese and Indian companies

ABU DHABI: Abu Dhabi will commit up to $272 million to support technology start-ups, it said on Sunday, in a dedicated hub as part of efforts to diversify its economy.

US tech giant Microsoft will be a strategic partner, providing technology and cloud services to the businesses that join the hub as the capital of the United Arab Emirates continues its push to reduce reliance on oil revenue.
Abu Dhabi derives about 50 percent of its real gross domestic product and about 90 percent of central government revenue from the hydrocarbon sector, according to ratings agency S&P.
The emirate launched a $13.6 billion stimulus fund, Ghadan 21, in September last year to accelerate economic growth. Ghadan means tomorrow in Arabic. The new initiative, named Hub 71, is linked to Ghadan will also involve the launch of a $136 million fund to invest in start-ups, said Ibrahim Ajami, head of Mubadala Ventures, the technology arm of Mubadala Investment Co.
The goal is to have 100 companies over the next three to five years, Ajami said. “The market opportunities in this region are immense,” he added.
Mubadala, with assets of $225 billion and a big investor in tech companies, will act as the driver of the hub, located in the emirate’s financial district.
Softbank will be active in the hub and support the expansion of companies in which it has invested, Ajami said, adding that Mubadala is also aiming to attract Chinese and Indian companies, among others.
Mubadala which has committed $15 billion to the Softbank Vision Fund, plans to launch a $400 million fund to invest in leading European technology companies.
Incentives mapped out by the government include housing, office space and health insurance as part of the $272 million commitment, Ajami said.
Abu Dhabi will also announce a new research and development initiative on Monday linked to the Ghadan 21 plan, according to an invitation sent to journalists.