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| Could these compromise due diligence? |
Chinese listing applicants are increasingly demanding commitment letters from their Hong Kong sponsors, potentially compromising the due diligence done on initial public offerings (IPOs) in Hong Kong.
Commitment letters promise a particular price for a company's shares at IPO, giving issuers certainty in a volatile market. But sponsors risk not achieving this price, incentivising quick and shallow diligence to minimise exposure.
"Commitment letters encourage sponsors...