The changing role of cornerstone investors in Asia

Author: Ashley Lee | Published: 25 Oct 2012

Cornerstone investors have become fundamental to initial public offerings (IPOs) in Asia, with offerings such as those of Felda Global Ventures and Astro dependent on their support. But rules are vague and significantly differ throughout jurisdictions.

Cornerstone investors are usually sovereign wealth funds, institutional investors or, in the case of Hong Kong, local tycoons. They guarantee that a proportion of the offer will be sold and stimulate investor demand.

Although cornerstone investors were clamouring to be involved in deals four years ago, the volatile markets mean that there has been a role reversal: banks must actively seek cornerstone investors to be involved in deals.

The cornerstone investor’s role has changed drastically since 2006. According to one Hong Kong-based partner, “In a bull market, cornerstone investors...