Is Pre-IPO Share Plan adoption becoming the new standard for Hong Kong IPOs?

 

Pre-IPO share plans are increasingly embedded in Hong Kong IPO preparation. Companies are recognising incentive mechanisms as a powerful tool to attract, incentivise, and retain critical talent ahead of listing.

This shift come against the backdrop of a volatile Hong Kong IPO market. After a downturn in 2023, Hong Kong IPO activity remained subdued in 2024 before showing signs of recovery in 2025. Meanwhile, more private companies have been adopting share plans prior to potential listing, reflecting a broader trend toward equity incentives as part of long-term growth and possible IPOs.

Key Trends for Pre-IPO Plan Adoption

Abstract graph increase
Rising Adoption Levels

Over the past decade, approximately 67% of newly listed Hong Kong companies adopted share schemes prior to IPO. Adoption accelerated further in 2024 and 2025, with rates exceeding 70% in both years. This shows that equity incentives are becoming a more common part of private companies’ talent and growth strategies, before they reach the IPO stage.

GettyImages-2165154334
Evolution in Plan Design

The employee incentive landscape is also evolving in structure. There has been a shift toward share award schemes and hybrid scheme that combine both share options and awards. Compared with options, share awards are often viewed as offering potential retention benefits and aligning employees more directly with ownership. Hybrid structures allow companies to adopt a more balanced approach for talent retention with cost efficiency.

AdobeStock 473276830-Group-of-employees-discussing
Talent Attraction in High-Growth Sectors

Technology, consumer discretionary, and healthcare companies demonstrate some of the highest rates of pre-IPO plan adoption, exceeding 80%. These three sectors also account for a significant proportion of newly listed companies in Hong Kong. As high-growth sectors, they face sustained competition for experienced management and specialised talent well ahead of listing. In this context, equity incentive plans are an effective tool for creating a sense of ownership and supporting retention during the critical pre-listing phase.

Key Drivers Behind Adoption

  • User shareholder individual search individual

    Increased competition for talent

    As competition for executive talent intensifies, companies may face greater expectations to demonstrate stronger management alignment and long-term incentive structures. Pre-IPO share plans help support team stability and align employee interests with broader company objectives and success.

  • online reporting market laptop graph icon gradient

    Established market practice

    Pre-IPO share plans have become a well-established practice in Hong Kong’s IPO market. As issuers and advisers gain more experience with plan design and implementation, equity incentive has become more familiar in the market, supporting their wider use among private companies ahead of listing.

    With pre-IPO share plans now widely regarded as a common feature, issuers often follow prevailing market practice to remain competitive. The use of established scheme vehicles, such as trust structures, further supports implementation efficiency and streamlined administration ahead of listing.

  • regulatory regulation law

    Enhanced regulatory clarity

    Although Chapter 17 of the HKEX Listing Rules applies to listed issuers, its clearer guidance on scheme design, limits, and disclosure has indirectly influenced pre-IPO scheme planning. Greater regulatory transparency reduces compliance uncertainty, making companies more comfortable implementing share plans ahead of IPO.

Together, these developments suggest that pre-IPO share plans are no longer optional, but strategically important. For companies approaching listing, equity incentives are increasingly viewed as a strategic mechanism to support talent retention and long-term value alignment.

For more insight into our latest research, download our report today.

Download our report

For more insights, enter your business email address to receive our latest report. The report will be emailed to you.

We'll process your data in line with our privacy notice. Your information will be held securely and will not be passed to any third parties for their own use.
You have the ability to unsubscribe from future mailings at any time.

Our latest insights

View all insights
View all insights