Is the issuer "working for" the investment bank? The quantitative faction's Hong Kong stock IPO raised 100 million but only received 5.8 million

Recently, Quantitative Group (2685.HK) launched its IPO and is expected to be listed on the Hong Kong Stock Exchange on November 27.

This global offering plans to issue 13.3475 million shares, with an offering price range of HKD 8.8-9.8.

Based on a midpoint price of HKD 9.3 per share, Quantitative Group expects to raise a total of HKD 124 million.

However, the embarrassing fact is that Quantitative Group's net fundraising amount is only HKD 5.8 million.

More than 90% of the IPO fundraising amount has been used to pay for listing expenses, which reached HKD 117 million.

Specifically, Quantitative Group has hired a total of six coordinators/financial advisors, including China International Capital Corporation, CITIC Securities, Fosun International Securities, Futu Securities, Tiger Brokers, and Fosun International Capital, which has almost "drained" the fundraising amount.

"The fees for projects that are hard to sell will be very high, and some companies' listing expenses can account for more than 80% of the fundraising amount, but it is indeed rare for it to exceed 90%, which is a bit exaggerated," a South China investment banker told Xinfeng.

Such a high proportion of listing expenses is a first in this year's Hong Kong IPO market. According to Wind data, among the 88 new stocks listed in Hong Kong as of November 20 this year, Newman (2530.HK) had the highest proportion of listing expenses, but it was less than 40%.

From a business perspective, Quantitative Group's fundamentals have indeed undergone some changes.

One of Quantitative Group's core businesses is providing matchmaking services for financial institutions through Yang Xiaomiao, matching financial institutions with terminal borrowers that meet their financing service target customer standards, similar to a financial intermediary.

This is because acquiring new customers and attracting traffic is not an easy task for many financial institutions, and this type of matchmaking service essentially helps terminal financial institutions obtain credit customers.

However, the loan marketing and traffic diversion business has always been in a gray area.

As early as 2021, major departments, including the central bank, jointly issued the "Administrative Measures for Network Marketing of Financial Products (Draft for Comments)" (hereinafter referred to as the "Draft"), aimed at regulating network marketing activities of financial products and protecting the legitimate rights and interests of financial consumers.

The Draft states that, unless explicitly stipulated or authorized by laws, regulations, and normative documents, financial institutions shall not entrust other institutions and individuals to carry out network marketing of financial products; non-bank payment institutions shall not provide marketing services for financial products such as loans and asset management products.

Although the Draft has not yet come into effect, it has indeed been a focus of regulatory attention during the IPO process.

For example, Youka Group, which claims to be "China's largest financial intermediary technology service provider," faced soul-searching questions from the China Securities Regulatory Commission during its attempt to go public in Hong Kong: "Does the company's business comply with the provisions of the 'Administrative Measures for Network Marketing of Financial Products (Draft for Comments)' and explain the impact of these provisions on the company's ongoing viability?"

Now, Youka Group's prospectus has expired, and its listing in Hong Kong is still a long way off.

Perhaps to ensure a smooth listing, Quantitative Group has divested this business.

Currently, Quantitative Group has stopped providing matchmaking services (or loan facilitation and traffic diversion services) to financial institutions and has promised relevant financial regulatory authorities in mainland China that it will not engage in such businesses in the future "A key purpose of the previous loan facilitation institutions rushing to go public was not actually financing, but rather to enhance credibility. However, it now seems that obtaining endorsement through listing will be quite difficult," pointed out a person from a financial institution in Beijing.