What is the purpose of splitting a holding subsidiary of a listed company in Hong Kong?

The main purpose of listing one of its holding subsidiaries is to obtain additional development funds. Since the holding subsidiary has the listing conditions, the listing of this subsidiary will usually be accompanied by the placement of old shares by the parent company in the IPO process, so that the parent company that was originally split can obtain the sale of old shares and recover a sum of money to invest in another business; Even without the placement of old shares, the funds obtained by subsidiaries in the IPO process can be obtained by subsidiaries in this way to continue to develop their business. Many times, the parent company does not have enough funds to invest in business development, but it is likely that the future development of the subsidiary will be limited and it must be done without investment.

Generally, the share price of the parent company will not necessarily fall under such a split. It depends on the specific situation, what kind of business or subsidiary will be spun off. If the business operated by the subsidiary is more promising, the spin-off listing can also make the subsidiary develop better. The share price of the parent company is often stimulated by the spin-off news, and if the business operated by the spin-off subsidiary is not optimistic, the spin-off listing will often make the market criticized. It will almost make the market understand as a pure form of selling assets. Even if funds are obtained, there is no substantial investment direction, which is generally unfavorable to stock price performance. Even when the spin-off subsidiary went public, the share price was diving.

As for why investors want to buy the shares of the original parent company, it is mainly because of this split listing. In many cases, the shareholders of the original parent company have priority to subscribe for the shares of the split listed company. Generally, the split of this right will be reflected in the share price of the parent company after obtaining this right, and the market will deduct the commission to own the share price of this right after calculation. Generally speaking, this right will have a registration date, which will be reflected in the next trading day after the registration date.