Post by : Jyoti Gupta

Photo:linkedin

Charles Li Xiaojia, former CEO of Hong Kong Exchanges and Clearing (HKEX), is launching a new investment firm aimed at helping small companies and start-ups raise funds through a special listing framework.

Li filed on June 18 to list his newly established company, Micro Connect International Finance (MCIF), under HKEX’s Chapter 21 regime. This framework allows newly formed investment companies to raise capital from institutional investors without needing to meet traditional profit or asset requirements.

“During my time at HKEX, we were not fans of the Chapter 21 structure because it allowed companies to raise money without a clear investment focus,” Li said. However, he emphasized that MCIF is different, with a clear theme: enabling international investors to invest in cash-flow-based assets from small firms in mainland China and elsewhere.

Chapter 21 rules require companies to raise a minimum of HK$150 million (around US$19 million) from at least 300 qualified investors, each investing HK$500,000 or more. Although these rules have been in place since 1989, only 21 firms have listed this way so far.

Li acknowledged that some companies listed under Chapter 21 have faced challenges, including regulatory actions over suspected market manipulation. However, he believes the structure should not be abandoned because of a few bad actors.

MCIF aims to raise significantly more than the minimum amount, with funds targeted at financing small and medium-sized enterprises (SMEs) and start-ups. Unlike his previous venture, Micro Connect Group — which operates a Macau-based platform for trading revenue obligations — MCIF will focus on packaging investments as cash flow contingent obligations (CCOs). These CCOs allow investors to earn returns based on a company’s daily income over fixed periods, such as 12 to 18 months.

To ensure transparency and quality, MCIF plans to collaborate with about 100 partners, including landlords, payment companies, and digital platforms, to provide real-time data on SMEs’ cash flows.

Li highlighted the benefit for small businesses: they avoid paying fixed interest rates or diluting ownership by selling equity shares, making this funding model an attractive alternative.With MCIF, Li hopes to revolutionize how small companies access capital in Hong Kong and beyond.