HONG KONG: Investment banks handling the world’s largest listing so far this year are set to earn underwriting fees well below the industry norm, with advisers enduring skinny margins to win business following a prolonged slump in listings.
Nine underwriters of Shenzhen-listed battery giant CATL are slated to receive a maximum of HK$238.7mil, the Chinese company said in a securities filing on Monday, with much of that discretionary, based on the success of the deal.
The fixed commission on what is Hong Kong’s biggest listing so far this year is just 0.2% of the proceeds raised, well below the industry average.
It’s only a third of what Midea paid banks last year for its near US$4.6bil listing in Hong Kong, and a quarter of the 0.8% underwriting fee awarded by China’s largest express delivery company SF Holding in its US$792mil Hong Kong second listing last November.
CATL said in the filing it may grant a 0.6% discretionary fee as an incentive.
“The fee income barely covers the cost, but banks are eyeing the discretionary fees and hope securing a role will help them stay on future deals,” said one source familiar with the pitching process. — Reuters
