IPO sponsor fees hit new low as rivalry escalates
Equity capital market participants were stunned this week when a US bank, thought to be Morgan Stanley, offered to charge nothing to be a sponsor of China Tower’s $10bn Hong Kong IPO — a highly unusual move even by the city’s ultra-competitive standards. But the aggression was not unique, as most banks asked for token fees in the hope of winning the mandate.
The bids shine a light on the price undercutting that has intensified in Hong Kong in recent years. As jumbo-sized deals become rarer in Asia’s equity capital market, zero sponsor fees are the latest ace up the sleeve of banks looking to get ahead of rivals.
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