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Following is the speech by the Financial Secretary, Mr Donald Tsang, at the launch ceremony of MTR Privatisation Share Offer:
Jack (So), Distinguished Guests, Ladies and Gentlemen,
It is a great pleasure to welcome you to this ceremony today for the launch of the Initial Share Offer of the shares in the MTR Corporation. It is an occasion I have been looking forward to with great eagerness for a long time.
Indeed, this is a red-letter day for Hong Kong. The partial privatisation of the MTR through a public offering is a first for Hong Kong. It is a milestone for the Government, the Company and the investment community.
But, perhaps most important, it offers the people of Hong Kong, who make over two million trips a day on the MTR, the opportunity to become individual stakeholders in a successful corporation. Make no mistake, the MTR is a key component of our comprehensive transport infrastructure, and it is one of the icons of our economic growth over the past 25 years.
Eighteen months ago, in my 1999 Budget Speech I announced the Government's intention to privatise the MTR. We have worked hard since then to realise this goal. This has included drafting and enacting new legislation; selecting a strong team of financial institutions to prepare, manage and underwrite the Share Offer; and developing a comprehensive advertising campaign, which starts tomorrow. You have probably noticed some of the material already; and we will preview the rest shortly.
I am sure many of you are familiar with our reasons for privatising the MTR, but some of the benefits bear repeating.
First, Hong Kong's transport sector and our economy will benefit. Privatisation reinforces our commitment to a free market; underscores the reasons why Hong Kong is one of the world's freest economies; and sends a strong positive signal to the international community.
Second, the successful execution of this Share Offer, the first for a major public asset in Hong Kong, will enhance our status as an international financial centre. The listing on the Hong Kong Stock Exchange will add quality and diversity to our stock market. In the longer term, it sets the precedent for possible privatisation of other public enterprises.
Third, the MTR is well-known as an efficient railway. It is one of the few profitable mass transit systems in the world. However, experience has shown that privatisation can bring about further improvements in efficiency, productivity and flexibility and that's what Hong Kong is all about.
Fourth, investors will directly benefit from this opportunity to buy into a successful company. Local and international investors alike will have the chance to participate in the ownership of a company that has a long and impressively consistent history of profitable performance and good prospects for future growth.
Finally, as I noted when I set the scene for MTR privatisation, the proceeds will be a useful addition to our revenue over the next two years. They can help us reduce and even avoid the budget deficits I had forecast at that time.
These are the factors behind the public offering. How will investors view it? The Hong Kong economy in general has enjoyed a remarkable resurgence in the past three quarters. And the prognosis for our continued economic health is good.
In this context, I see the MTR privatisation as an ideal way of allowing individual investors in Hong Kong and institutional investors worldwide to own a part of the very fabric of Hong Kong and its future. This will be a global offering as befits our status as Asia's premier international city. The marketing roadshow for international institutions starts this week, covering Asia, Europe and the U.S.
The share offer to the Hong Kong public will begin in two weeks. We expect to sell around 20% of the Company's issued share capital and the indicative price range at this stage is between HK$8.00 and HK$9.38 per share. To encourage small-scale investors to apply, we will allocate shares in board lots of 500. We will offer incentives for retail investors in the form of discounts and bonus shares along the lines of those for the Tracker Fund last year - a 5.25% discount to the final offer price and loyalty bonus shares in the ratio of 1:20 after one year and 1:15 after two years.
As I said earlier, this is Hong Kong's first privatisation exercise, and the Government has a responsibility to inform the community about the details of the Share Offer and to help explain the processes. Our marketing and publicity programme will run over the next two weeks with advertisements appearing on television, in print and at MTR locations.
We are also using the Internet. Later this afternoon, the government will open a dedicated privatisation web site at <www.mtripo.com.hk>. For those who are not yet Internet-connected, we will have a fully-equipped call-centre for answering enquiries. Also, for the first time in Hong Kong, our aim is to enable potential investors to apply for shares on-line, this will be our aim. We will announce further details of this closer to the time of the Hong Kong Public Offer.
Many in the MTR Corporation Limited, the financial sector and associated professions, our Legislative Council and the Administration have worked hard for this project over the past 18 months. Hong Kong owes them a big thank-you.
Let's all wish this project every success over the next four weeks to ensure a successful IPO and its listing on the HKEx. On that day, I hope many of the MTR's daily passengers will not only be able to catch the train but also, with other investors in Hong Kong and worldwide, catch the future.
Thank you.
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Note: This document is not an offer of securities for sale or an invitation to purchase securities in Hong Kong, the United States or elsewhere. Securities of MTR Corporation Limited may not be offered or sold in the United States absent registration or an exemption from registration, and any offering of securities to be made in the United States will be by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.
End/Monday, September 11, 2000
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