Ex-UBS Banker's Boutique Goes Public With Some Help From Clients

(Bloomberg) -- After helping dozens of Chinese companies go public, dealmaker Calvin Choi’s AMTD International Inc. is roping in former clients as early investors before its own initial public offering. It’s an unusual tactic they like to call the “SpiderNet.”

The former UBS Group AG veteran’s boutique investment bank sold pre-IPO stakes in recent months to several of its past underwriting clients including Chinese smartphone giant Xiaomi Corp., according to a regulatory filing last week. Online travel agency Tongcheng-Elong Holdings Ltd., ticketing app Maoyan Entertainment and digital advertising startup Mobvista Inc. also bought shares in AMTD ahead of its proposed IPO in New York.

AMTD worked on the Hong Kong IPOs of all four companies in the past year, data compiled by Bloomberg show. The investments were disclosed in preliminary registration documents filed with the U.S. Securities and Exchange Commission ahead of AMTD’s planned share sale.

The interlocking relationships are an intentional part of AMTD’s business model. In the IPO documents, AMTD describes building an “ever-extending network” dubbed the “SpiderNet ecosystem” which it says can foster “rapid multi-dimensional expansion.” The filing contains 62 arachnid references, at one point detailing an employee stock-option program called the “AMTD SpiderMan Share Incentive Plan.”

‘SpiderNet’ Ecosystem

“By embracing the ‘AMTD SpiderNet’ culture, we go beyond servicing one client offering one product at a time,” the firm wrote. “We believe that our ‘AMTD SpiderNet’ ecosystem is the bedrock of our success.”

As an example, it touts how Xiaomi hired AMTD for its IPO, formed a virtual banking venture with AMTD’s parent company and invested in an online brokerage that’s an AMTD business partner. Xiaomi then ended up buying a stake in AMTD itself.

AMTD details several other equity and debt underwriting clients that it has invested in or formed partnerships with. The filing didn’t mention AMTD had past advisory relationships with Tongcheng-Elong, Maoyan Entertainment or Mobvista. AMTD was a joint global coordinator on the $250 million Hong Kong IPO of Maoyan Entertainment, which started trading in February. It had more junior roles on the other deals, working as a joint bookrunner.

Hotelier’s Investment

The companies were among 15 investors that bought stakes in Hong Kong-based AMTD between April and June, according to the regulatory filing. AMTD raised $53.5 million from the stake sales, which gave it a pre-money valuation of about $1.3 billion.

AMTD’s pre-IPO investors also include other publicly traded companies like Sun Hung Kai & Co., owner of a Hong Kong consumer finance business, and the billionaire Lo family’s Regal Hotels International Holdings Ltd. George Chan, who’s well-known in the Hong Kong business world from his time running the city’s biggest phone company, was on the list along with former Citigroup Inc. banker Francis Leung and financier David Chiu.

While it’s rare on Wall Street for an investment bank’s clients to become its owners, the setup isn’t totally unheard of in Chinese financial circles.

Alibaba Group Holding Ltd., a serial dealmaker in the nation’s tech industry, owns a stake in homegrown investment bank China International Capital Corp. and has hired it for M&A deals. Alibaba’s finance affiliate was also a cornerstone investor in last year’s IPO of China Renaissance Holdings Ltd., which has previously advised Alibaba.

Rejected Application

AMTD ranked 22nd among advisers on Hong Kong IPOs this year, according to data compiled by Bloomberg. That’s down from 19th place during all of 2018. It placed 59th this year on a ranking of advisers on Asian high-yield bond sales outside Japan this year, the data show.

Choi, the firm’s chief executive officer and chairman, was a managing director on UBS’s investment banking team before joining AMTD in 2016. He previously did stints at Citigroup, PwC and Arthur Andersen. Choi is also a shareholder in the boutique advisory firm’s parent company, AMTD Group Co.

This isn’t the first time AMTD Group has tried to tap the public markets: its insurance brokerage arm, AMTD Strategic Capital, filed for a Hong Kong IPO in 2017. The listing application was rejected by the Hong Kong bourse, which didn’t disclose the reasons at the time.

--With assistance from Crystal Tse, Benjamin Robertson and Fox Hu.

To contact the reporter on this story: Ben Scent in London at bscent@bloomberg.net

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, ;Philip Lagerkranser at lagerkranser@bloomberg.net, Amy Thomson

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