Crypto exchange Huobi has reportedly acquired a controlling share in a Hong Kong-based electronic products manufacturer through a backdoor listing deal.
Chinese cryptocurrency exchange Huobi has reportedly acquired the controlling stock interest in Hong Kong-based Pantronics Holdings Ltd. through a backdoor listing deal, local news outlet JRJ.com reported August 27.
A backdoor listing, which is also known as a reverse takeover or reverse Initial Public Offering (IPO), allows a privately held company to purchase a publicly traded company avoiding the public offering process, regulatory issues, and due diligence. Upon completion of the deal, the buyer gains automatic inclusion on a stock exchange.
Huobi reportedly acquired 73.73 percent of Pantronics Holdings Ltd., which makes the crypto exchange the actual controller of the power-related electrical and electronic products manufacturer. Pantronics halted trading its shares on the Main Board of the Hong Kong Stock Exchange (HKEx) on August, 22, 2018 due to a “possible offer to be made under Rule 26 of the Hong Kong Codes on Takeovers and Mergers.”
When asked whether the exchange intends to conduct a backdoor listing, Huobi CEO Li Lin reportedly said that “it is just a rumor.” Li stated the exchange business is currently not fully compliant on a global scale, so a backdoor listing would be very difficult to operate. Li added that he believes the “traditional financial market will embrace the blockchain economy in the future.”
On July 30, Caixin media reported that the HKEx was preparing a revision of rules to take stern measures towards backdoor listings within its efforts to clean up the market and improve the quality of listed companies. While the proposed measures are reportedly not aimed at blocking backdoor listings, they intend to ensure that companies do not skirt rules and undermine investor confidence. David Graham, HKEx’s chief regulatory officer and head of listing commented:
“We essentially allow a backdoor listing. But what [we want] to ensure is that when this happens, the quality of the assets and the ultimate combined company to be listed on our exchange have been through an appropriate due diligence and vetting process.”
Houbi Token is currently trading at $2.35 according to Coinmarketcap, having gained almost 8 percent over 24 hour period, while some media attribute the token’s price surge to the recent acquisition. Pantronics Holdings Ltd.’s market capitalization is currently over HKD 926 million ($118 million).
Source: Cointelegraph https://cointelegraph.com/