Digital currency exchange Huobi has completed a reverse takeover—acquiring a publicly listed company in order to avoid the lengthy process of an IPO.
The Hong Kong Stock Exchange announced on August 27 that electronic devices manufacturer Pantronics Holdings (桐成控股) transferred 73.73% of its shares to Huobi founder and chairman Leon Lin (Li Lin) making Huobi the actual controller of the company through several of its subsidiaries. The transaction is priced at HK$2.72 per share with a total amount nearing $77 million, Coindesk is reporting.
The operation began quietly on August 21 with Pantronic’s shares resuming trading on the Hong Kong Stock Exchange today. Pantronic’s shares opened today 94.8% higher with the stock price at HK$6.
Huobi’s backdoor listing opens a path to the secondary financial market. However, the Hong Kong Stock Exchange has been wary of such moves announcing in June it will tighten listing rules to prevent the formation of shell companies and backdoor listings.
As all cryptocurrency exchanges, Huobi has been unwelcome in China since the local government started cracking down ICOs in September 2017. Regulators put a complete ban on crypto trading both in China and abroad in February. However, the regulatory storm did not end there.
The crypto crackdown has continued this month with local governments banning all crypto-related events in China’s commercial hub Guangzhou and Beijing’s business center Chaoyang District. The ban follows a cryptocurrency content clean-up on China’s most popular social platform WeChat which sealed of some of the most popular blockchain-centered official accounts including Huobi News (火币资讯). Crypto chatter has also been removed from Baidu Tieba, a popular chat forum platform.
Since the September token trading ban, Huobi has moved overseas and began diversifying its business branding itself as a blockchain consulting and research platform. Based in Singapore, it now has service centers in Hong Kong, South Korea, and Japan.
The company has been also trying to make its way back to China. In April, the company announced opening headquarters for Huobi China in Hainan Special Economic Zone along with an acceleration and research lab called the “Global Cultural and Creative Blockchain Lab.” It joined Tencent and 20 other companies to form the China Blockchain Security Alliance in June and has been working with e-commerce giant JD’s cloud division on blockchain tech.
Huobi is not the only cryptocurrency-focused Chinese company looking at ways to enter the Hong Kong Stock Exchange. The three largest manufacturers of cryptocurrency mining equipment—Bitmain, Canaan Creative, and Ebang—are currently preparing for a Hong Kong IPO. Bitmain plans to file for IPO next month and raise at least $3 billion, Ebang is aiming to raise up to $1 billion, while Canaan is targeting at least $400 million.