HONG KONG: Fintech companies are rushing to raise equity in Hong Kong to fund expansions in cryptocurrencies, capitalising on investor fervour as the city started accepting applications for stablecoin issuer licences yesterday.
At least 10 Hong Kong-listed companies raised a total of more than US$1.5 billion (RM6.4 billion) from share placements in July to be invested in areas including stablecoins, digital assets and blockchain-based payments, according to a Reuters calculation based on exchange filings.
They include digital asset platform OSL Group, China’s biggest retail cloud solution provider Dmall Inc and artificial intelligence giant SenseTime Group .
The equity offerings had been snapped up by investors upbeat about stablecoins, which are cryptocurrencies pegged to assets such as the US dollar.
Hong Kong’s stablecoin bill passed in May took effect yesterday as the Asian financial hub races the US in setting up a regulated market for such tokens, seen as a key lubricant in the burgeoning digital economy.
Before the bill passed, raising funds for stablecoin development in Hong Kong held less appeal for investors.
“We’re seeing a notable increase in fundraising activity linked to stablecoins and digital assets,“ said Anthony Pang at international law firm Baker McKenzie, which advised on Dmall’s HK$388 million (RM210 million) share placement last month.
“The momentum in this space is real, and it’s accelerating.”
In late July, OSL raised US$300 million to support global initiatives, including the development of stablecoins and a digital payment network.
The equity raising was completed within just three days after the company appointed Macquarie to assist with the offering. The bookbuilding process, which attracted significant interest from sovereign wealth funds and major hedge funds, was efficiently completed in less than three hours, demonstrating strong demand from institutional investors.
“Investor zeal toward cryptocurrencies and stablecoins was palpable,“ OSL chief financial officer Ivan Wong said.
An index tracking Hong Kong-listed stablecoin concept stocks has surged 65% this year, far outperforming the benchmark Hang Seng Index, which is up roughly 23%.
Hong Kong’s de facto central bank cautioned the public last week against “growing frothiness” and “excessive exuberance” due to the recent hype around stablecoins.
The crypto exuberance has also spilled into the private equity and startup markets.
“Venture capitalists are very interested in this area, and many are actively looking at such projects,“ said Liu Honglin, a Shanghai-based attorney at Man Kun Law Firm, who helped venture capital-backed digital payment service provider Kun raise more than US$50 million in Hong Kong last month.
“There’s definitely a lot of excitement around stablecoin, but the sector is far from being frothy. It’s just the start of a trend.”
JF SmartInvest Holdings raised HK$785 million last month to invest in Real World Assets (RWA), a term used for digital tokens that represent traditional assets such as stocks and commodities.
Chinese AI giant SenseTime raised HK$2.5 billion and will use part of the proceeds to explore areas such as blockchain, RWA and stablecoins.
Other companies that tapped the crypto craze include ZA Online, Crypto Flow Technology and Easou Tech.
Traditional finance players, including custodians and investment managers, are eager to get involved, so “interest in these topics, and fintech applications more generally, is set to continue,“ said Kishore Bhindi, a Hong Kong-based partner at Linklaters. – Reuters