Tencent Deal Throws Spotlight on Hong Kong Backdoor Listings

A heavily discounted purchase of a loss-making solar-panel maker last week has cast a spotlight on the Chinese takeovers of so-called listed shell companies in Hong Kong, which may be used to sidestep the bourse's rigorous listing process. China's No.1 social network and online media company Tencent Holdings Ltd and developer Evergrande Real Estate Group joined forces to purchase Mascotte Holdings Ltd for $97 million, a 97 percent discount on the target company's market capitalization. While Tencent and Evergrande's investment pales compared to Tencent's $187 billion market value, the deal highlights a booming grey market in Hong Kong's so-called shells, listed companies that no longer have material business operations or assets.