December 17, 2018 – The Hong Kong Stock Exchange (HKEX) is reluctant to approve the initial public offering (IPO) applications of Chinese bitcoin mining equipment manufacturers, according to a person involved in the talks.
Following the 2017 cryptocurrency market boom, mining giants Canaan Creative, Ebang and Bitmain applied earlier this year in May, June and September, respectively, to sell shares on the HKEX. Bitmain’s bid, in particular, was seen as a watershed moment, as it marked the first time a major crypto startup sought to go public.
But the 2018 bear market has underscored the sharp ups and downs of the crypto space, making the exchange nervous about listing such companies, the source told CoinDesk. Canaan Creative’s application has already lapsed, and the other two face a high bar in convincing HKEX.
An HKEX spokesperson said the exchange does not comment on individual companies or individual listing applications. Bitmain declined to comment, citing its pre-IPO quiet period, while Canaan Creative and Ebang did not respond to CoinDesk’s inquiries by press time.
Stepping back, the IPO process in Hong Kong starts with a company filing a draft prospectus with the HKEX. Then the exchange will begin back-and-forth talks and questions with the applicant.
If the application is approved by both the HKEX and the Securities and Futures Commission (SFC) – Hong Kong’s financial regulator – the case will proceed to a listing hearing, during which the offering size and share price are decided and then made public.
However, if an applicant does not make it to a listing hearing after six months from filing, the application will lapse, meaning the case is no longer active, though the applicant could choose to later reactivate the case if it still wishes to pursue the fundraising.
Canaan’s application lapsed in November after the firm failed to make it to the listing hearing six months from its May filing. Ebang, which submitted on June 24, is only two weeks away from the six-month window ending. Bitmain, the best known of the bunch, is almost halfway through the six-month period.
“Right now, I don’t think that any of them could make it to the listing hearing,” said the source, noting that both HKEX and the SFC must sign off. “If either one doesn’t approve it, you can’t make it to the listing hearing.”