(Bloomberg) -- A former head of the Hong Kong stock exchange has launched an exchange in neighboring Macau to list Chinese micro businesses.
Charles Li, co-founder of Micro Connect Ltd., said the firm’s licensed exchange in Macau has listed 39 small firms. The trading platform adhered to rules very similar to traditional finance but takes into account the specific features of smaller firms with funding needs, he said at a ceremony in Macau on Thursday.
Companies with minimum annual revenue of 5 million yuan ($712,050) and with operating track records of one year are eligible to apply for a listing of so-called revenue based assets, according to Li. Micro Connect Macao Financial Assets Exchange aims to list 100,000 to 200,000 smaller firms a year when the model matures, Li said.
“This is basically a mini HKEX with an aim to bridge institutional capital with small firms,” Li told reporters in the former Portuguese colony Thursday.
In addition to the companies, called “single portfolio vehicles,” 25 funds, known as “segregated portfolio accounts collective,” debuted on the exchange. Some were managed by private equity giant Hopu Fund and venture capital firm Plum Ventures.
Micro Connect spent its own capital during the first three years to establish a viable model, Li said. It invested 4.4 billion yuan in more than 13,000 small shops since Dec. 2021. It has since stopped that model and has recovered about 2 billion yuan. Li said he is confident to reclaim the remaining funds in the next two years.
Micro Connect was launched in 2021, shortly after Li stepped down as head of the Hong Kong exchange. The firm was valued at $1.7 billion after its latest funding round in 2023.
Micro Connect sought to link foreign capital to small businesses across China, offering institutional investors a way of gaining a direct share of revenue.
His firm came under criticism last year by Chinese commentators, who said the firm’s business model amounts to a type of peer-to-peer lending. The official newspaper of China’s National Financial Regulatory Administration also urged that efforts should be made to regulate its development and avoid any negative consequences due to the lack of oversight.
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