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An initial public offering, or IPO, is when a private company raises capital by offering shares of stock to be traded on a public exchange for the first time. Newly created securities for an IPO are sold in the primary market. After an IPO, investors become shareholders of the company, and can trade existing shares with other investors in the secondary market.
Companies seeking to IPO on an exchange entrust financial institutions to handle all the listing-related matters. Upon the approval of the SEHK and SFC, a company can be listed on the Hong Kong Stock Exchange.
Hong Kong IPO shares are distributed through international placing and public offering, with possible adjustments through the share reallocation mechanisms.
International placing refers to the allocation of shares through underwriters to professional investors, including cornerstone investors (large institutional investors, private equity, etc.) and anchor investors (long-term institutional investors). Shares allocated to cornerstone investors typically have a six-month lock-up period. According to the listing rules, 90% of newly issued shares are allocated through international placing, with the remainder available for public offering to retail investors.
To ensure ample opportunities for retail investors, there's a reallocation mechanism that deducts shares from cornerstone and anchor investors based on the oversubscription ratio of the public offerings. By reallocating shares, retail investors can access up to 50% of the total public offering.
Allotment results for IPOs are typically announced one trading day before listing, and allocated shares will arrive on the same day as the announcement.
If your subscription to the IPO is partially successful, or there's a difference between the subscription price and the final issue price, the amount will be refunded to your account the same day when the allotment results are announced. To ensure accuracy, please carefully review your account funds and statements.
Note: In the event of any special circumstances, please refer to exchange announcements and notifications in the app.
The prospectus specifies the number of Hong Kong offer shares available for public offering, as well as their corresponding offer price. Applications for any other number of Hong Kong offer shares will not be considered and are liable to be rejected.
Note: The number of shares and amount payable will vary for each new share issuance. The minimum application quantity for Hong Kong offer shares is usually one lot, and the maximum application limit will be announced by the exchange.
Hong Kong's new share issuances can be priced using one of three methods:
The final issue price is determined prior to subscription. Investors can then directly apply for the new shares at this confirmed price. This is a relatively rare occurrence.
A price range is determined prior to subscription, with the final issue price determined by the bookrunner based on institutional investor demand.
The company sets a price range for its shares that includes a flexible pricing mechanism, which allows for a maximum 10% decrease in the issue price at the lower limit.
Note: Please refer to the actual announcement of the exchange for specific pricing rules.
A company listing on the Hong Kong Stock Exchange involves several key time periods:
Subscription period: Lasts four days from the start date to the end date. Please apply to subscribe during this period if you wish to purchase new shares. Specific dates will be specified in the company prospectus.
Pricing day: The final issue price is determined by the issuing company and underwriters after the subscription deadline. It usually falls on the deadline date or the next trading day.
Allotment results announcement: The issuing company announces the allotment results one trading day before the new shares are listed. Allocated shares will be available on the same day as the announcement.
Listing day: The first trading day for newly listed shares.
Green Shoe option exercise period: For Hong Kong IPOs, the issuer may grant an over-allotment option to underwriters, typically equal to 15% of the total number of shares originally issued in the IPO. The option can be exercised within 30 days after the end of the public offering in Hong Kong. During this period, investment banks may buy additional shares to support the stock price if it falls below the issue price, or the issuer may issue new shares to the investment banks if the stock price rises sharply.
Lock-up period for cornerstone investors: Six months after the listing day, during which cornerstone investors cannot sell their shares for cash. The lock-up period can be extended by agreement between the issuer and the investors.
Lock-up period for major shareholders of listed companies: Six months for Main Board listings, two years for GEM Board listings.
Note: Please check the subscription page for the opening and closing dates of subscription periods.
A: You can view available IPOs and your subscription records in the Airstar Bank app:
Go to Discover > Markets > HK > IPOs.
Note: If you have any questions, please contact customer service.
A: Airstar Bank supports the following IPO subscription methods:
• Standard subscription: You can use your buying power to subscribe for new shares. Buying power includes available cash and financing through Airstar Bank Margin (secured by securities or assets in your account).
• IPO financing: In addition to your buying power, you can borrow additional funds from Airstar Bank specifically for IPO subscriptions. The maximum subscription amount equals your available principal multiplied by the leverage ratio.
A: To allow sufficient time for processing, the subscription deadline on Airstar Bank is usually earlier than the time specified in the prospectus (T-day, usually 12:00 PM). The exact deadline depends on your subscription method:
• Standard subscription: Typically closes at 10:00 AM on the subscription deadline date (T day). Please refer to the subscription page for the exact time.
• IPO financing: Typically closes at 10:00 AM on the subscription deadline date (T day). Please refer to the subscription page for the exact time.
A: You can submit, edit, or cancel your subscription before the cutoff time. Please note:
• IPO financing: The cutoff time is 10:00 AM on the subscription deadline set by Airstar Bank. Applications will be processed and funds will be deducted from 10:00 AM. After this time, applications cannot be edited or cancelled.
• Standard subscription: The cutoff time is 10:00 AM on the subscription deadline set by Airstar Bank. Applications will be processed and funds will be deducted from 10:00 AM. After this time, applications cannot be edited or cancelled.
Note: Please refer to the subscription page for more details on fund deductions. For changes to your account assets, please check your account details and statements.
A: Fees are generally charged according to the following rules. Please refer to the subscription page for the actual charges.
• Subscription handling fee:
The standard subscription handling fee is 0 HKD. For subscriptions using IPO financing, the fee is 100.00 HKD per order, payable regardless of whether shares are allotted.
• Interest on IPO financing: 0
• Interest on Airstar Bank Margin:
Margin used in IPO subscriptions will be included in your margin account. Interest on all margin transactions and subscriptions in your margin account is calculated daily based on the account balance, and settled on the last trading day of each month. The interest rate is the same as the margin rate for Hong Kong stocks (usually 6.8% p.a.; please refer to the app for the actual rate). You can borrow and repay it at any time. Since the interest amount varies with your account activity and margin usage, the estimated daily interest on the subscription page is calculated based only on the margin amount for the current IPO subscription. Please refer to your account statement for the final interest charged.
A: You can check your allotment results on the announcement date (usually the last trading day before the stock is listed) through the following methods:
• Open the app and go to Discover > Markets > HK > IPOs > History.
• Open the app and go to Activity > Reminder to check your notifications.
• If your Airstar Bank account is linked to an email address, check your email for the allotment notification.
• Review your account statement for the day.
• You can open the app and go to IPOs > Allotment Results to view your results at any time, or search on this site for public offering allotment results using your ID number.
A: According to announcements made by the listing company and the stock exchange, the following arrangements will apply:
• Postponement of listing: Successfully submitted applications will remain valid, while failed applications will be cancelled.
• Cancellation of listing: All applications will be cancelled or deemed invalid after the relevant announcement is published by the stock exchange.
• Changes in listing terms and conditions: If the changes do not result in a postponement or cancellation of the listing, your application will not be affected. Otherwise, please refer to the relevant arrangements above.
Note: Handling fees are non-refundable. Bank financing interest will be calculated based on the actual number of days the funds are used.
A: Even after your application is submitted by Airstar Bank to the upstream institution, it may still be rejected by the upstream and therefore not eligible for the allotment. If this occurs, we will notify you as soon as we receive the information and arrange a refund. Please check your in-app notifications for the actual refund time. Possible reasons for rejection include:
1. Each client can only apply once for each IPO. If you apply using different accounts or through different brokerages, your application may be cancelled.
2. If your identification information is incomplete or incorrect, your application may be cancelled.
Note: In the above cases, handling fees and financing interest will still be charged as usual. If you have any questions, please contact customer service.
A: Once you initiate a Hong Kong IPO subscription and it is accepted by Airstar Bank, if the company goes public as planned, here are the changes you can expect for your account assets:
• After your subscription is confirmed by Airstar Bank, the subscription funds will be immediately frozen. Frozen funds are not deducted and do not incur interest charges. You cannot use these funds for other purposes while they are frozen. If you cancel the order before the subscription deadline, the frozen funds will be immediately released.
• After the subscription deadline, Airstar Bank will deduct the portion of the subscription amount covered by your buying power and the handling fee. If you used IPO financing, the IPO financing interest will remain frozen and will not be deducted yet. Please refer to your daily statement for actual details.
• After the allotment results are published, your account assets will be updated by Airstar Bank according to your allotment status. Please refer to your daily statement for actual details.
○ No Allotment (0 shares): The subscribed amount paid from buying power will be refunded to your buying power. If you used IPO financing, the IPO financing interest will be deducted.
○ 0 < allotted amount ≤ the subscribed amount paid from buying power: The difference between the subscribed amount paid from buying power and the allotted amount will be refunded to your buying power. If you used IPO financing, the IPO financing interest will be deducted. Your holdings will increase by the allotted shares.
○ Allotted amount > the subscribed amount paid from buying power: The difference between the allotted amount and the subscribed amount paid from buying power will be additionally deducted from your buying power. If you used IPO financing, the IPO financing interest will be deducted. Your holdings will increase by the allotted shares.
A: Using margin financing to subscribe to an IPO involves the following risks:
• If your account risk status is "Margin Call" during the subscription period, Airstar Bank reserves the right to liquidate your positions.
• Margin financing significantly increases your leverage, raising your account risk on the IPO listing date. If you are allotted shares, ensure you have sufficient cash in your account. If a margin call occurs on the listing day and you do not have enough cash, Airstar Bank reserves the right to sell part of your stock holdings under certain circumstances.
• In the event of a margin call, any investment losses arising from Airstar Bank selling stocks to protect your account will be solely your responsibility.
• For more details, please refer to Schedule I: Risk Disclosure Statements of the Client Agreement.
A: Airstar Bank only supports IPOs that offer Electronic Initial Public Offering (EIPO). If a listing company does not support EIPO, we cannot process the application. Check the prospectus to see if EIPO is available.
