Rising legal risks in initial public offerings have deterred foreign investment banks from underwriting Chinese listings in Hong Kong.
Goldman Sachs is the only foreign investment bank that has worked enough to secure a spot in the top 10 in the first quarter, the Hong Kong Economic Journal reports, citing data provider Dealogic.
Tighter regulations on IPOs have resulted in increased legal costs, the report said.
Foreign investment banks focus more on quality listings and bigger deals rather than take risks with smaller IPOs.
Ringo Choi, a partner at Ernst & Young, said tougher risk control requirements for foreign investment banks are part of the reason many of them have not been active in IPOs.
Also, domestic listing candidates mainly attract local investors, undercutting the advantages of foreign investment banks, Choi said.
– Contact us at [email protected]