On August 2nd, Shandong's WeGo, a provider of medical technology and equipment, was the first private enterprise from mainland China to be listed in Hong Kong. The Hong Kong stock exchange approved the transfer of 2.6386 billion shares to H-shares, with official trading starting as of August 8th. GF Securities (000776.SZ, 1776.HK) is their designated investment bank for domestic China and its wholly-owned subsidiary GF Holdings (Hong Kong) Co., Ltd. (GFS Hong Kong) will be the international broker for the WeGo Group Medical Polymer Co., Ltd. GF securities has become the first full-service investment bank to provide full H-share related listing and trading services to a private company from the mainland of China.
The pilot H-shares project began in 2017, and is an experimental service option approved by the China Securities Regulatory Commission (CSRC), which focused on providing a model for future H-share listings. Mainland enterprises listed in Hong Kong, experience cross-border circulation outside the mainland of China, which results in “different benefits for domestic and foreign shareholders.” The new system is designed to fully transfer the non-tradable domestic shares across the border, which are fully converted to H-shares listed on the Hong Kong stock exchange. Since the “full conversion” of H-shares considers the interests of both domestic and foreign shareholders, improving the turnover and liquidity of the Hong Kong stock market. This reduces the cost of trading and facilitates the convergence of discounts, improving the allocation value of Hong Kong shares. For mainland companies which decide to list H-shares, its significance is no less than the secondary listing in Hong Kong.
WeGo is a leading enterprise throughout China for disposable medical instrument. The main products include disposable medical consumables, raw materials and orthopedic instruments. It was part of the “national high-tech research and development (863) plan to achieve industrialization ” and “state-level enterprise technology center.” The products are mainly sold to domestic market, and exported to the United States, Germany, Romania, Australia and the United Kingdom and more than 30 countries and regions. As one of three enterprises in the H-share pilot project announced by the CSRC, WeGo will become the first private enterprise in the program after Legend Holding and AVIC Heavy Machinery Co., Ltd.
The H-share pilot project carries tremendous influence for future developments in finance. They represent a higher degree of professionalism and challenges to overcome. For example, from the outset, the design of the pilot project involved opening new accounts, trading, settlement and other fully connected services, while providing clients with professional comprehensive services through efficient coordination within the agency. At the same time, since the circulation involves a new institutional design and cross-border transactions, brokers need to have continuous innovation capabilities and in-depth experience with cross border financial transactions. GF Securities has been deeply connected to Chinese capital markets for many years and has accumulated vast experience, possessing a strong reputation among high-quality enterprises from China. As an industry leader among full-service investment banks throughout China, GF Securities is fully licensed and is experienced at working with advanced technology. The wholly owned subsidiary of GF Securities, GF Holdings (Hong Kong), acts as the overseas broker for the H-Shares pilot program for WeGo. Its professional and efficient cross-border financial services will cooperate with the parent company based in Guangzhou, providing the full advantages between multiple regions to provide a one-stop financial service solutions.