The week in investor relations: Direct listing win for Wise, AMC’s share sale backtrack and speeding up IPOs in Hong Kong
– London saw its first direct listing this week – as well as the capital’s biggest float of the year and London’s largest ever tech listing – when payments group Wise went public. City AM reported that the firm’s value hit £8 bn ($11 bn) when it floated on Wednesday. Shares began trading at £8 each, following an auction process earlier that morning to determine the price of the company’s shares. ‘The UK has gone out of floatation fashion with just 5 percent of companies delivering an IPO choosing London as the launch pad. This is particularly worrying because we see IPOs as an opportunity to bring more people to investing for the first time,’ Susannah Streeter at Hargreaves Lansdown told the paper. ‘But now more firms might see direct listings as a good alternative to traditional IPOs, which are more costly, needing the input of expensive services from investment banks.’
– According to CNBC, AMC Entertainment said it has tabled a proposal that would have asked its shareholders to allow the movie theater company to issue up to 25 mn more shares. In an SEC filing, AMC said the proposal has been withdrawn from an agenda for its upcoming AGM. Chief executive Adam Aron also announced the news on Twitter, saying: ‘It’s no secret I think shareholders should authorize 25 mn more AMC shares. But what YOU think is important to us. Many yes, many no. AMC does not want to proceed with such a split.’ The cinema chain has become a ‘meme stock’, driven up by Reddit investors: at one point this year, it had climbed more than 3,000 percent. AMC’s chief has repeatedly appealed to retail investors on Reddit, sharing their memes, embracing their charitable causes and even launching a rewards program for stockholders.
– The Hong Kong stock exchange will introduce a new process to speed up the IPO process, reported the South China Morning Post, in what it said was ‘the latest effort to reclaim its crown as the world’s largest hub for new listings’. The digital platform – Fast Interface for New Issuance – will replace the current time-consuming paper subscriptions, cutting the initial public offering process from five business days to two. But it won’t be implemented until the fourth quarter of 2022 at the earliest, noted the paper.
– ‘Investors are pouring into global equity funds with a fervor never seen before,’ declared the Financial Times (paywall). About $580 bn has been added to the sector in the first half of 2021, putting the category on track for a record inflow, said the paper, citing data provider EPFR. ‘Strategists with Bank of America estimate that if the pace of inflows continues at the same clip for the remainder of the year, equity funds will take in more money in 2021 than in the previous 20 years combined,’ the FT reported.
– The Wall Street Journal (paywall) reported that the Chinese government said it would tighten rules for companies seeking to sell shares overseas and strengthen oversight of foreign-listed companies, which could curb attempts by companies to raise money in the US. The move comes as Chinese regulators intensify scrutiny of technology companies that recently listed in the US. The government said in new guidelines that regulators need to deepen cross-border co-operation over audit supervision and amend laws and regulations ‘on data security, cross-border data flow and other confidential information management.’
– Last week, Didi Chuxing, the Chinese ride-sharing company, saw its shares fall by more than a quarter following its IPO when the Chinese internet regulator ordered its app be removed from domestic stores over concerns about data security. This week the Financial Times reported that two senior members of Congress have called on the SEC to investigate whether the company misled US investors ahead of its initial public offering. Senator Bill Hagerty, R-Tennessee, and Senator Chris Van Hollen, D-Maryland, who both sit on the powerful Senate Banking Committee, said they wanted the SEC to examine whether Didi was forthcoming about its contact with Chinese regulators prior to the listing of its shares.
– In a ‘damning report’, the UK’s financial watchdog, the Financial Conduct Authority (FCA), said fund houses have failed to properly assess the value of their funds, reported Citywire. Asset managers have ‘failed to properly assess whether their funds offer value to investors’, have excluded their highest-charging fund share classes from cost comparisons and ‘cannot justify their fees’, according to the FCA. In a review of 18 fund houses, the regulator said many of the firms did not take into account what exactly funds should deliver when assessing performance. Many also considered a fund still offered value to investors even when it had underperformed the markets.
– Reuters reported that mutual fund boards would be required to disclose information on the gender and racial diversity of their directors under a rule change recommended to the SEC. The suggestion from an advisory subcommittee to the agency, which would need further approval, goes further than subcommittee members had outlined in the spring and reflects a growing focus from other quarters on the financial industry’s lack of diversity. At present, there is ‘virtually no representation of women and minorities’ on the boards that set policies across the $29.3 tn US mutual fund industry, said Gilbert Garcia, chair of the subcommittee and managing partner of Houston-based investment firm Garcia Hamilton & Associates. He said the subcommittee does not have a specific set of disclosures in mind, but said in general more data should lead to more diversity.