Sidley advised QuantumPharm Inc. (HKEX: 2228) (also known as XtalPi) as Hong Kong and U.S. counsel in its initial public offering (IPO) and listing on the Main Board of the Stock Exchange of Hong Kong (HKEX). The IPO raised gross proceeds of approximately HK$989.3 million (US$126.7 million) pre-greenshoe. CITIC Securities (Hong Kong) Limited acted as the sole sponsor in the transaction. Overall coordinators include CLSA Limited, China International Capital Corporation Hong Kong Securities Limited, Jefferies Hong Kong Limited, Deutsche Bank AG, Hong Kong Branch, and CMB International Capital Limited (also the Sole Financial Adviser).
XtalPi becomes the first Specialist Technology Company listed under Chapter 18C of the Hong Kong Listing Rules that came into effect in March 2023, setting a significant milestone for the history of Hong Kong IPOs. Paul Chan, Financial Secretary of Hong Kong, Bonnie Chan, CEO of the HKEX, and Carlson Tong, Chairman of the HKEX attended the listing ceremony.
XtalPi is also the first artificial intelligence (AI)–powered drug and new material discovery company listed in Hong Kong. The landmark transaction is expected to attract more outstanding and top global technology companies to list in Hong Kong, especially hard-tech and deep-tech companies, which comprise most of the Chapter 18C Specialist Technology Companies categories.
Founded in 2015 by three quantum physicists trained at the Massachusetts Institute of Technology (MIT), XtalPi combines quantum physics, AI, cloud computing, and automated robotics to provide R&D solutions and products for a wide array of industries, including pharmaceutical and biotechnology, petroleum and renewable energy, and advanced materials.
“Sidley has a science nature in its gene. During the IPO execution, Sidley demonstrated its knowledge and understanding in science and deep tech as well as exhibited its strong capability of navigating legal innovation,” said Ronald Tam, CFO of XtalPi, adding: “While we adopt a combination of today’s most advanced technologies, Sidley is able to effectively communicate with our scientist founders (besides the regulators) and translate our technologies and solution offerings in a simple and understandable way, unlike most transactional lawyers. ”
Tam also commented: “In addition, Sidley is experienced in aligning the diversified interests of various stakeholders, including our blue-chip shareholders, our cornerstone investors internationally, and ourselves. It also proved its precedent-setting capability again by helping us become the first Chapter 18C public company in Hong Kong.”
XtalPi had received substantial investments before its IPO and ranked the first among global AI-powered drug discovery companies by aggregate funding raised through private equity financing as of December 31, 2023, according to Frost & Sullivan. The group of pre-IPO investors is led by Tencent, HongShan, 5Y Capital, PICC Health & Pension Fund, and China Life Chengda, which are designated as pathfinder investors, and includes others from world-renowned private equity and strategic investors including Mirae Asset, Google, and SoftBank.
XtalPi has also brought in a strong lineup of cornerstone investors for its IPO shares, which includes Peter Lee, the chairman of Henderson Land Development, and Prof. Bradley L. Pentelute of the Department of Chemistry of MIT.
The Sidley team is led by partners Constance Choy, a member of Sidley’s Management Committee and Executive Committee and the managing partner for the Asia Pacific region, Dr. Meng Ding, a MIT-trained physicist and a former technologist in Silicon Valley, and Claudia Yu. Other team members include counsel Liming Xu; senior managing associate Kevin Chan; managing associates Gilbert Han, Cindy Liu, and Maggie Bai; trainee solicitor Jessica Tse; and senior legal assistants Wendy Ho, Iris Lao, and Alice Liu. New York–based partners Carla Teodoro and Nicolas Brown advised on Investment Company Act of 1940 and U.S. tax matters respectively.
Sidley has been a pioneer in Hong Kong capital markets. It is one of the few international law firms that have represented the largest number of Chinese and international companies in Hong Kong IPOs. It has established an outstanding track record in precedent-setting Hong Kong listings since the HKEX started to roll out substantial reform for its listing regime in 2018:
- The first Specialist Technology IPO under Chapter 18C of the Listing Rules since the introduction of this regime in March 2023: QuantumPharm Inc.
- The first Integrated Circuit (IC) design company listed in Hong Kong in the last decade: BaTeLab Co., Ltd. (HKEX: 2149)
- Two of the five SPAC listings under Chapter 18B of the Listing Rules since the introduction of this listing regime in January 2022: HK Acquisition Corporation (HKEX: 7841) and TechStar Acquisition Corporation (HKEX: 7855).
- The first biotech IPO under Chapter 18A of the Listing Rules since the introduction of this listing regime in April 2018: Ascletis Pharma Inc. (HKEX: 1672)
- The second secondary listing for overseas issuers under Chapter 19C of the Listing Rules since the introduction of this regime in April 2018: Yum China Holdings, Inc. (HKEX: 9987; NYSE: YUMC) It was also the first non-TMT issuer which demonstrated “innovativeness” and listed under Chapter 19C of the Listing Rules, also known as “home-coming” listings.
- The fourth dual primary listing under Chapter 19C since the rule took effect in April 2018: MINISO Group (HKEX: 9896)
- The first batch of voluntary conversions to dual primary listings since new guidance from the HKEX was introduced in January 2022: Yum China and Baozun Inc. (HKEX: 9991; NASDAQ: BZUN)
Sidley has been “highly recommended” in “Most Innovative Lawyers in Science and Technology” at the FT Innovative Lawyers APAC Awards 2024 which was announced in May. It was also one of the finalists in 2023 for “Most Innovative Lawyers in Deal Making” and in “Facilitating Global Business.”
Sidley is the only firm to have been ranked Band 1 by Chambers Greater China Region/APAC in life sciences for 15 consecutive years. The firm recently published the 2024 Outlook for AI and Digital Health Trends, an overview of key industry trends emerging from the rapid advancement of AI and digital health technologies. It also launched a new AI Monitor, a centralized resource of AI-related content including Sidley thought leadership, the latest laws and regulations pertaining to AI, firm-hosted events, and access to Sidley’s AI lawyers.
