Cornerstone Investors in Vietnamese Overseas IPOs

For a Vietnamese company planning an overseas IPO, the quality of its first orders often decides the quality of the whole offering. Cornerstone investors commit to buy a fixed amount of shares at the IPO price before the book opens, and their names signal credibility to every other buyer. Used well, cornerstone investors reduce execution risk, support pricing and anchor the register for the first months of trading.

Used badly, they create disclosure problems, regulatory friction and Vietnamese approval delays. This article explains how cornerstone placements work in Hong Kong, Singapore and the United States, and what Vietnamese issuers must prepare at home.

What Cornerstone Investors Do in an Overseas IPO

Cornerstone investors are institutions or strategic buyers that sign a binding undertaking to subscribe for a defined number or dollar amount of shares in the offering, at the final offer price, in exchange for a guaranteed allocation. They are named in the prospectus and accept a restriction on resale. The structure is most developed in Hong Kong, common in Singapore, and informal in the United States, where similar demand is usually described as indications of interest.

Why Vietnamese issuers pursue an overseas IPO

Vietnamese companies look abroad for deeper institutional liquidity, a currency that matches global expansion, valuation benchmarks against regional peers and an exit route for private equity holders. Vietnamese law offers no well-trodden route for a domestic joint stock company to list its own shares on a foreign exchange, so most overseas IPO structures use an offshore holding company, commonly incorporated in the Cayman Islands or similar jurisdictions, that owns the Vietnamese operating entities.

Cornerstone investors then subscribe at the holding-company level, which shapes every Vietnamese-side issue discussed below.

What cornerstone investors add that ordinary orders do not

An ordinary institutional order is non-binding until allocation and can be reduced or withdrawn after the price moves. Cornerstone investors give certainty. A Vietnamese issuer that is new to international investors, or that sits in a sector with limited regional comparables, gains from having respected buyers validate the story before roadshow feedback arrives.

Placement Mechanics in HKEX, SGX and US IPOs

The process follows a similar sequence everywhere. The sponsor or bookrunners approach prospective cornerstone investors during pre-marketing, share the draft prospectus and valuation range, and negotiate a cornerstone agreement. Signature normally occurs shortly before the offer period opens, and the investor commits to the final price whatever it turns out to be within the range.

Hong Kong: the most structured regime

In a HKEX listing, the cornerstone tranche is carved out of the international placing and sometimes the public offer. The prospectus names each investor, the amount invested and the percentage of the offer and of the enlarged share capital. Cornerstone investors typically sign an agreement with the issuer, the sponsors and the underwriters. Bankers treat it as the reference model for Asian offerings.

Singapore: market practice within a prospectus regime

Singapore uses cornerstone investors extensively, particularly for REITs, business trusts and growth listings. The Singapore Exchange has no standalone cornerstone guidance comparable to Hong Kong, so the investors are governed by prospectus disclosure under the Securities and Futures Act, the SGX Listing Manual‘s minimum-distribution and free-float requirements, and the general rules on allocations to connected persons.

United States: indications of interest, not cornerstones

US offerings on Nasdaq or NYSE rely on registration with the SEC. No rule prescribes a cornerstone tranche. Issuers instead disclose that certain investors have indicated an interest in purchasing a stated amount, but the underwriters retain discretion to allocate fewer or no shares, and investors may choose not to buy. Customary lock-ups run for around 180 days.

Feature	Hong Kong (HKEX)	Singapore (SGX)	United States
Legal character	Binding agreement, specific HKEX guidance	Binding agreement, market practice	Non-binding indications of interest
Prospectus naming	Required, with background and terms	Customary, driven by prospectus rules	Often aggregate or named in the S-1
Typical lock-up period	At least six months from listing	Commonly six months, negotiated	Often 90 to 180 days, negotiated
Allocation certainty	High	High	Lower, subject to underwriter discretion

The Cornerstone Agreement: Commitment, Lock-Up and Allocation

The cornerstone agreement is the instrument that converts goodwill into enforceable demand. It is usually short but heavily negotiated.

Commitment

The investor agrees to subscribe or procure subscribers for a stated amount of shares at the offer price. Conditions normally mirror the underwriting agreement, including listing approval. The investor typically represents that it is independent of the issuer, is not funded by the issuer or its connected persons, and is acting within its legal powers.

Lock-up period

A lock-up period restricts the investor from disposing of the shares for a fixed time after listing. In Hong Kong the minimum is six months, and the same period is widely used in Singapore. Exceptions are narrow, most often a transfer to a wholly owned subsidiary that accepts the same restrictions. The lock-up supports aftermarket stability and is an important part of what the market is buying when it sees cornerstone investors in a prospectus.

Allocation and pricing mechanics

The agreement fixes either a number of shares or a monetary amount. Where the commitment is a dollar amount, the share count adjusts to the final price, and the agreement must address fractional shares and the effect of an upsized or downsized offering. Clawback and reallocation between tranches should not dilute the cornerstone allocation.

HKEX Guidance on Cornerstone Investors

The key HKEX source is its guidance letter on cornerstone investors, which I understand to be HKEX-GL51-13, read together with the Placing Guidelines for Equity Securities in the Main Board Listing Rules. Please verify the current guidance letter number, its latest revision date and the appendix numbering of the Placing Guidelines before relying on this summary, because HKEX has revised its rulebook and reorganised appendices in recent years.

As generally understood, the HKEX position permits cornerstone placements if several conditions are met:

• Cornerstone investors must be independent third parties, not core connected persons of the issuer, and are not accustomed to taking instructions from the issuer or its connected persons.
• The investment is not financed directly or indirectly by the issuer or its connected persons, and there is no side arrangement conferring rights or benefits beyond the guaranteed allocation.
• The investors do not obtain a board seat or nomination right through the placing.
• The shares are locked up for at least six months after listing, with limited carve-outs.
• The prospectus discloses each investor’s identity, background, investment amount and terms, and the issuer confirms the conditions above.

Two further points deserve verification with current text. First, how cornerstone shares count toward the minimum public float and toward Listing Rule 8.08(3), which limits the share of public float held by the top three public shareholders. Second, any recent HKEX refinements to bookbuilding, allocation transparency and the proportion of offer shares reserved for different tranches.

Using an Anchor Investor to De-Risk Book-Building

Bankers often call a large, credible cornerstone an anchor investor, because its commitment stabilises the book in the same way an anchor stabilises a vessel. The benefits are practical.

First, early coverage. A book that is already 30 to 50 percent covered by signed commitments before launch changes the psychology of the roadshow, because other investors fear missing allocation. Second, price discipline from cornerstone investors. Knowing a portion of demand is firm allows the bookrunners to resist pressure for a discount at the bottom of the range. Third, signalling. A respected long-only fund, sovereign wealth fund or strategic partner tells the market that diligence has been performed by a sophisticated buyer.

The risks run in the opposite direction. An anchor investor that is too large may reduce free float and aftermarket liquidity. Too much of the offering in locked-up hands can produce thin trading, volatile prices and a visible cliff when the lock-up period expires. Relying on one investor for most of the offering is dangerous, since a late withdrawal may damage confidence.

Selecting Strategic, Sovereign and PE Cornerstones

Cornerstone investors are not interchangeable, and Vietnamese issuers should compare categories deliberately. Each category brings different value and different constraints.

Type	Main benefit	Main concern for a Vietnamese issuer
Long-only and mutual funds	Stable holding, strong signalling	Price sensitivity and valuation discipline
Sovereign wealth funds	Large tickets, long horizon, credibility	Governance expectations, public disclosure, slower internal approvals
Strategic investors	Commercial synergy, technology, distribution	Independence rules, board rights, FDI screening, competition review
Private equity and growth funds	Familiarity with the story, sometimes existing shareholders	Exit intentions after the lock-up period and connected-person status

A strategic buyer among the cornerstone investors may want a commercial partnership and a board seat, but that request collides with the independence expectations applied to cornerstone investors in Hong Kong. A pre-IPO shareholder who wants to top up at the IPO may be treated as an existing shareholder or connected person, which restricts or prohibits participation. Sovereign funds require extensive know-your-client and sanctions diligence, so allow time.

For a Vietnamese issuer, the practical selection criteria are: independence, size relative to the offer, appetite to hold beyond the lock-up, reputation among other buyers, and a clean regulatory profile. Sanctions exposure, adverse media and unclear beneficial ownership can derail one of your cornerstone investors late in the process.

Disclosure and Regulatory Restrictions

Connected-person restrictions

Allocations to connected persons, including cornerstone investors, are tightly restricted in every major market. In Hong Kong the Placing Guidelines generally prohibit placing to directors, existing shareholders and their close associates without exchange consent, and cornerstone investors must not be core connected persons. If a Vietnamese founder, a pre-IPO investor or a related-party customer wants to participate, the sponsors must analyse the position early, because a late discovery can force a re-sizing of the tranche and a delay.

Placing guidelines and allocation integrity

Placing guidelines aim to ensure that the allocation process is fair, that preferential treatment is disclosed and that retail and institutional investors are not misled about the genuine level of demand. For the issuer, the lesson is to avoid informal assurances, side letters or fee arrangements for cornerstone investors, because such side benefits are exactly what the regulators prohibit and what the prospectus must not conceal.

Prospectus disclosure and liability

The prospectus must describe the cornerstone investors accurately. Misstatements expose the issuer, directors and sponsors to liability under the securities law of the listing venue.

Vietnamese-Side Issues

Foreign-investor approvals and FDI screening

If the offering is made by an offshore holding company, a cornerstone purchase of its shares does not directly trigger Vietnamese share-purchase procedures. The analysis changes when the investor takes a strategic stake in a Vietnamese operating company, or when the offshore holding company later acquires onshore equity.

In those cases the Law on Investment 2020, Decree 31/2021/ND-CP and sector laws govern market access conditions for foreign investors, registration of share purchases, foreign ownership limits in conditional sectors, and, in some industries, additional ministry approvals. For public companies, the Securities Law 2019 and Decree 155/2020/ND-CP address foreign ownership room.

Large strategic stakes may also raise economic concentration filings under the Competition Law 2018, and sensitive sectors such as banking and telecoms attract closer scrutiny.

The restructuring that creates the offshore holding company may itself require Vietnamese approvals, including outbound investment registration if Vietnamese individuals or entities hold the offshore shares, and tax clearance of the reorganisation. These steps should start before cornerstone discussions finish, so the investor receives a clear closing timetable.

SBV foreign exchange and DTA withholding

Foreign exchange controls apply to capital flows into and out of Vietnam. IPO proceeds raised offshore must be transferred into Vietnam through the correct capital account when used for onshore equity or shareholder loans, which State Bank of Vietnam (SBV) regulations monitor. Repatriating dividends upstream requires foreign-currency purchase procedures, tax compliance and, where relevant, evidence of the underlying investment registration.

On tax, Vietnamese domestic rules and double tax agreements (DTAs) determine withholding on dividends, interest and royalties paid to offshore entities. Hong Kong and Singapore each have a DTA with Vietnam, and the choice of holding jurisdiction should reflect treaty access, substance requirements and beneficial-ownership tests. The United States and Vietnam have not, to my knowledge, a DTA in force, which must be verified.

Indirect transfers of Vietnamese assets through the sale of offshore shares can also be taxed under Vietnamese guidance, so any secondary component of the offering needs tax review for the selling shareholders.

Negotiation Points and Pricing Effects

The commercial discussion with cornerstone investors usually centres on a short list of points.

• Size and share of the offer. Investors want enough allocation to matter, while the issuer wants to preserve free float and demand diversity.
• Price protection. Investors commit to the final price, but they sometimes ask for downside protection. Any such arrangement is likely to breach the prohibition on side benefits in Hong Kong and should be refused.
• Lock-up period and exceptions. Investors seek flexibility for affiliate transfers and hedging, while issuers and underwriters resist anything that weakens the aftermarket.
• Termination and conditions. The cornerstone agreement should not give the investor a wider exit than the underwriters have.
• Information rights. Selective disclosure of non-public information to cornerstone investors creates insider-dealing and disclosure risk, so access should follow the prospectus and normal diligence only.

On pricing, a credible anchor investor generally supports pricing at or near the upper half of the range, reduces the need for a discount and can improve aftermarket performance. The effect is not automatic: unclear Vietnamese approvals or heavy related-party dealings weaken any signal a headline name gives. Issuers should treat the cornerstone process as a diligence exercise as much as a marketing one.

Frequently Asked Questions

Are cornerstone investors legally required in an HKEX listing?

No. They are optional. Many Hong Kong IPOs use them because they improve certainty and pricing, but the issuer can proceed without them if the Listing Rules and Placing Guidelines are satisfied.

How long is a typical lock-up period for cornerstone investors?

In Hong Kong the minimum is six months from listing. Singapore practice commonly uses a similar period. In US offerings, lock-ups are negotiated and often range from 90 to 180 days.

Can a Vietnamese strategic partner be a cornerstone investor?

Possibly, but it must be independent of the issuer, not a connected person and not receive board rights through the placing. A partner wanting governance rights usually fits better as a pre-IPO shareholder.

Does a cornerstone purchase need Vietnamese approval?

If the investor buys shares of an offshore holding company, usually no direct approval is needed. Approvals arise when the investor takes an onshore stake or when the pre-IPO restructuring needs registration.

Do cornerstone investors lower the IPO price?

Not by themselves. They subscribe at the final price. A strong anchor investor commonly reduces discount pressure, but the final price still depends on valuation, market conditions and the quality of disclosure.

Next step: before approaching any cornerstone investors, map your offshore structure, Vietnamese approvals and connected-party list with counsel, and then request a confidential preliminary consultation with IVLF Advisors to build the cornerstone shortlist and timetable.

Disclaimer: This article provides general information only and does not constitute legal, tax or financial advice. Rules and practice change frequently, and the HKEX references above should be verified against current text. Obtain advice on your specific circumstances before acting.