Huobi IPO Speculation Surfaces as Crypto Exchange Buys Public Company

Huobi has purchased a majority stake in Pantronics Holdings, spurring speculation that the exchange is planning a backdoor listing deal.

Chinese cryptocurrency trading platform Huobi has reportedly bought a majority stake in Hong Kong-listed electronics manufacturer Pantronics Holdings, spurring speculation that the exchange is planning an initial public offering (IPO) through a reverse takeover.

According to shareholding disclosures filed by Pantronics Holdings on August 21, the company has transferred more than 221 million of its ordinary shares to several Huobi subsidiaries. The agreed price per share was HK$2.72 ($0.35), valuing the deal at around $77 million.

Following the transaction, Pantronics temporarily suspended trading of its shares on the Main Board of the Hong Kong Stock Exchange (HKEX) due to a “possible offer to be made under Rule 26 of the Hong Kong Codes on Takeovers and Mergers”.

Huobi has not made an official statement explaining the exchange’s motivation and intentions regarding the purchased stock. Reportedly, the company is waiting for approval by HKEX.

If given a green light, the deal will make Huobi chairman Li Lin the largest Pantronics shareholder, controlling 73.73% of the firm. This would allow the crypto major to take over the public company and then enter the secondary financial market, a procedure called a reverse takeover, or backdoor listing.

Speaking to the media, Li said that this was “just a rumor”. He further explained that the cryptocurrency exchange business is currently not fully compliant on a global scale, so a backdoor listing would be very difficult to operate. Li added that he believes the “traditional financial market will embrace the blockchain economy in the future”.

In a separate development, Randi Zuckerberg, the elder sister of Facebook founder Mark Zuckerberg, has joined the advisory board of Huobi to develop the company’s new public blockchain, according to a recent press release. Experts on the committee provide guidance on topics ranging from the basic technology of blockchain to industrial applications, commercial modeling, as well as governance and development issues.