How a banker fighting a Hong Kong ban broke a Wall Street record


For a former banker facing a two-year ban from Hong Kong’s financial watchdog, Calvin Choi is riding high.

Two weeks after the AMDD Digital founder rang the opening bell for the New York Stock Exchange, his obscure Hong Kong-based financial services company has made history. According to data from Dealogic, it had the fastest rise in share price of a U.S.-listed company after an IPO.

After trading at $7.80 on July 15, AMTD Digital shares hit $400 on July 29, a record meteoric rise of more than 5,000%. From there, the stock continued to rise, hitting a high of $1,679 in August.

Its market value at one point surpassed that of Goldman Sachs. This is despite earning just $21.5 million for the 10 months to February 2022 and having only around 50 employees in Singapore and Hong Kong.

AMTD Digital, in a statement titled “Thank You Note to Our Investors,” said it had no idea what caused the historic spike.

Analysts said there was no clear cause for AMTD Digital’s rise to prominence, with debate over whether it could be a “meme stock rally” driven by retail investors. The company’s low free float — only 19 million shares out of 185 million were offered in the IPO — meant the stock was open to manipulation, analysts said.

AMD Digital’s rise is all the more remarkable as it comes as Washington launches a regulatory crackdown on US-listed Chinese companies with more than 200 mainland and Hong Kong groups at risk of delisting in 2024. if they do not comply with the audit requirements.

The AMTD Group was founded in 2003 by Hong Kong tycoon Li Ka-shing’s CK Hutchison Holdings and the Commonwealth Bank of Australia. With its main subsidiaries, AMTD Idea and AMTD Digital, it offers investment banking, asset management, insurance brokerage and digital financial services.

AMDD Digital’s main product is its so-called SpiderNet, which it loosely defines as an “ecosystem of superconnectors” for its customers.

Choi, an accountant by training, joined the AMTD Group in 2016 as chairman after five years at UBS and before that at PwC and Citigroup. He created AMTD Digital and has been involved in multiple charitable and social foundations and trusts.

A regular attendee of events such as the World Economic Forum in Davos, Choi has nurtured relationships with prominent companies including Chinese technology group Xiaomi and prominent business families. Andrew Chiu, the grandson of late Hong Kong tycoon Deacon Chiu, was previously vice chairman of what is now AMTD Idea.

On AMTD websites, Choi regularly praises the Chinese Communist Party, citing Chinese President Xi Jinping and his goal to stage the “great rejuvenation of the Chinese nation.”

Line chart of share price since listing ($) showing AMTD Digital's stock price bubble

AMDD Digital’s July IPO was Choi’s third international listing for a group company in as many years. The group’s investment bank, AMTD Idea – formerly AMTD Digital’s largest shareholder AMTD International – listed on the NYSE in 2019 before completing a secondary listing in Singapore the following year.

New York-listed AMTD Idea shares soared 525% after AMDD Digital listed. A 2017 listing application by the group’s insurance subsidiary, AMTD Strategic Capital Group, was rejected by the Hong Kong stock exchange for reasons that were not disclosed.

Choi became a billionaire with the surge in AMTD Idea and AMTD Digital shares, but the group is facing regulatory scrutiny from the rising share price. The Singapore Stock Exchange said in a statement to the Financial Times that a subsidiary was in communication with the NYSE about the volatility.

“Choi is a marketing master. He is close to major institutions such as the Monetary Authority of Singapore and political figures such as [former Hong Kong leader] Carrie Lam, but it was always style over substance,” a person involved in the due diligence said on AMTD. Choi and AMTD did not respond to multiple requests for comment.

Choi’s scrutiny comes as he battles regulators in his hometown of Hong Kong. He is appealing a ban by the city’s Securities and Futures Commission on a sale of AMTD Group shares in 2015. Choi was still at UBS, which was the financial adviser to the sellers, including Morgan Stanley Private Equity Asia, while major shareholder of AMDD. Band.

The SFC discovered that Choi was involved “in the business” of one of the buyers, LR Capital Group, a global investment firm and multi-family office, according to an AMTD website.

He “led the decision-making” at LR Capital in connection with the sale, and “exceeded the scope of a typical hedge banker”. This was done without disclosure to Morgan Stanley or UBS, placing him in a potential conflict of interest, the SFC said.

The regulator also accused him of a conflict of interest involving LR Capital again in an initial public offering in 2014 and in January this year decided to bar him from the industry for two years.

The SFC did not disclose the nature of Choi’s alleged relationship with LR Capital. But shortly after the sale of Morgan Stanley, he took over as chairman of the AMTD group. His appeal against the SFC decision is scheduled for a hearing in December.

AMTD Group claims to be a “leading investment firm”, underwriting 16 U.S. IPOs since Choi joined the firm and raising a total of $13.4 billion, according to Dealogic figures.

Yet the shares of all of these companies are currently trading at an average of 75% below their IPO price.

The AMTD Group also had to restructure $718 million in bonds raised since 2019, as bondholders agreed in February to extend bond maturities by three years and cut interest payments. One of AMDD’s bonds was originally due in March. Its $500 million bond is trading at 46 cents on the dollar.

Hong Kong tycoon Li Ka-shing’s CK Hutchison Holdings disavowed the company earlier this month, saying it had no business relationship with AMTD Digital and was selling “less than 4%” of the shares it it still held in AMTD Group.

Other projects seem to have stalled. Working with Chinese tech giant Xiaomi, AMTD won a coveted digital banking license in Hong Kong in 2019, but industry insiders are confused by the bank’s strategy.

“These are the most inactive virtual banks,” said a Hong Kong virtual bank adviser. “They don’t have real marketing in Hong Kong, people in the industry are wondering what they’re doing.”

Although AMTD’s stock price has started to decline, analysts said regulators should take a closer look at the company.

Nate Anderson of short seller Hindenburg Research accused the NYSE of ignoring “glaring problems” and focused on collecting listing fees rather than protecting the integrity of US markets. The NYSE declined to comment.

“The U.S. Securities and Exchange Commission antennas should have been in place,” Mak Yuen Teen, a professor of accounting at the National University of Singapore, said of the AMTD Digital listing.

Having so many shares owned by the parent was another red flag, Mak said. “With all [these issues] considered, why were they allowed to list? »

Additional reporting by Hudson Lockett and Tabby Kinder in Hong Kong


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