Growth Enterprise Market: Guide for Companies, Investors & Founders

I spent a long time assuming the Growth Enterprise Market was a fallback option a place where companies went when they could not get onto the Main Board. That assumption was wrong, and it cost me months of misunderstanding one of the most strategically useful capital markets in Asia. Once I actually studied how growth enterprises market works, who uses it, and what the 2024 reforms changed, I saw it completely differently.

The growth enterprises market is a dedicated listing board on the Hong Kong Stock Exchange built for companies in their growth phase. It gives ambitious businesses access to public capital before they accumulate the long profitability track record the Main Board demands. If you run a growing company, advise one, or invest in them, this is the guide I wish I had found first.

Quick Summary The Growth Enterprise Market, known as GEM, is a second board of the Hong Kong Stock Exchange that targets high-growth companies and SMEs without a lengthy profit history. It launched in 1999, went through a near-death period between 2019 and 2022, and came back strongly after major reforms took effect on 1 January 2024. Those reforms introduced an R&D eligibility test, cut founder lock-up periods, removed quarterly reporting, and created a real fast-track route to the Main Board. Hong Kong ranked number one globally for IPO fundraising in 2025, raising HKD 285.8 billion across 119 listings. Only one new company listed directly on GEM in 2025, but two more transferred from GEM to the Main Board a sign the platform is finally working as designed. PwC forecasts 150 listings in Hong Kong in 2026, raising between HKD 320 billion and HKD 350 billion.

What the Growth Enterprise Market Actually Is

I want to start by clearing up the most common misconception I see in every article about GEM. People treat it as a weaker, inferior version of the Main Board. That framing completely misses the point.

GEM exists because some of the most valuable companies in the world spend years building before they generate consistent profit. The Main Board rewards companies that have already built something. GEM backs companies that are in the middle of building it. Those are two genuinely different stages of a business, and they deserve different capital market structures.

The platform sits inside the Hong Kong Stock Exchange alongside the Main Board, governed by the same regulators HKEx and the Securities and Futures Commission. This is not a loosely regulated junior market. It runs on a strict disclosure framework that puts the burden of transparency directly on the companies that list there and the sponsors who bring them to market.

Where GEM Came From and Why It Almost Disappeared

Hong Kong launched GEM in November 1999, right in the middle of the global technology boom. The timing made sense. Fast-growing tech companies around the world were raising capital at enormous valuations despite generating little or no profit, and traditional listing frameworks were not built to accommodate them.

The early years of GEM were busy. Companies listed, capital moved, and the market served its purpose. Then the dot-com crash arrived and wiped out a large portion of GEM’s early listed companies. The market spent the next decade rebuilding its credibility through multiple rounds of rule changes, none of which quite solved the core problem.

The most damaging decision came in 2018 when HKEx restructured GEM as a standalone board and removed the smooth transfer mechanism that let GEM companies upgrade to the Main Board. That single change broke the strategic logic of listing on GEM in the first place. If you list on GEM but face huge barriers to ever moving to the Main Board, why would you choose GEM over waiting for Main Board eligibility?

The result was predictable. Growth enterprises market activity collapsed steadily. By 2022 not a single new company completed a GEM listing for the entire year. Zero. That number forced HKEx to act seriously, and the 2024 reforms were the result.

Who GEM Is Built For

After studying the market closely I found four distinct types of companies that genuinely belong on GEM. Every one of them shares one quality — they are building something real, they need capital now, and they cannot wait several more years for a Main Board track record.

The common thread is growth. These are not struggling businesses looking for emergency capital. They are expanding operations, investing in products, and moving fast. GEM gives them the public capital structure to keep moving without the decade of profitability history the Main Board requires.

How GEM Listing Requirements Work

Getting onto growth enterprises market is not as easy as some people assume. The entry requirements are lower than the Main Board but they represent a genuinely meaningful standard. You cannot just show up with an idea and expect a listing.

Every applicant needs at least two full financial years of operating history. After that, you qualify under one of three financial tests. The cash flow test requires at least HK$30 million in positive operating cash flow across the two years before listing. The market capitalisation test sets a minimum size threshold at the point of listing. The R&D eligibility test introduced in January 2024 requires combined revenue of at least HK$100 million across the two most recent financial years with year-on-year growth, R&D spending of at least HK$30 million across those same two years representing at least 15% of total operating costs each year, and a minimum expected market capitalisation of HK$250 million at listing.

Every listing also requires a licensed sponsor a corporate finance professional who conducts detailed due diligence, assesses the company’s suitability for listing, and submits the application to HKEx. This is not a ceremonial role. The sponsor carries genuine legal responsibility for the quality of the work they produce, and choosing the wrong one is one of the most expensive mistakes a listing applicant can make.

The Reforms That Changed Everything

I want to be specific about what the 2024 reforms actually did because most articles either skip this section entirely or describe it in vague terms that do not help anyone make a real decision.

The R&D Eligibility Test

Before January 2024, if your company invested heavily in research and development but had not yet generated strong operating cash flow, GEM had no pathway for you. The new R&D test changes that completely. Any company from any industry that meets the revenue growth, R&D spend, and market capitalisation thresholds can now apply. This opened GEM to an entirely new category of innovative businesses — deep tech, biotech, advanced manufacturing, AI — that previously had no viable Hong Kong listing option at this stage of development.

The Streamlined Transfer to Main Board

Removing the transfer mechanism in 2018 was arguably the single decision that damaged GEM most. The 2024 reforms brought it back in an improved form. A GEM issuer that meets Main Board financial requirements, maintains ownership continuity, and reaches minimum daily trading thresholds can now transfer without appointing a new sponsor or producing a full prospectus-level listing document. The path from GEM to Main Board is real and usable again, which fundamentally changes why a company would choose to list on GEM in the first place.

Shorter Founder Lock-Up

The post-IPO lock-up period for controlling shareholders dropped from 24 months to 12 months, matching what Main Board founders face. For founders who saw the two-year restriction as too punitive for an early-stage listing, this change removes one of the most common objections to choosing GEM.

No More Quarterly Reporting

Growth enterprises market companies previously had to publish financial results every quarter a requirement the Main Board does not impose. Quarterly reporting is genuinely burdensome for smaller companies running lean teams. Removing it cuts one of the most time-consuming and expensive compliance obligations that made GEM unattractive to high-quality listing candidates.

GEM vs Main Board: A Direct Comparison

I use this comparison with founders who assume Main Board is always the better choice. For a company at the right stage, GEM is not a compromise it is the correct market for where they are right now.

Where Hong Kong’s IPO Market Stands Right Now

I want to give you the most current numbers because the context around GEM matters enormously when you understand what is happening in Hong Kong’s broader capital market.

Hong Kong finished 2025 as the world’s number one IPO venue for the first time since 2019. The exchange welcomed 119 new listings across the year, raising HKD 285.8 billion — a 225% increase compared to 2024. That is not a small recovery. That is a complete resurgence of a market that spent several years near the bottom of global rankings.

The headline deal of 2025 was CATL — the world’s largest electric vehicle battery manufacturer — which listed in Hong Kong raising the equivalent of USD 5.3 billion in the biggest IPO globally since 2023. Three other billion-dollar listings accompanied it, and 55 companies in total raised HK$1 billion or more during the year. Global capital flowed back into Hong Kong from Asia, Europe, the Middle East, and North America.

Looking ahead to 2026, PwC forecasts approximately 150 companies will list in Hong Kong, raising between HKD 320 billion and HKD 350 billion. Over 300 companies have already filed listing applications with HKEx, including a strong pipeline of large-cap issuers and innovative technology businesses.

What Listing on GEM Delivers in Practice

I found three benefits that founders consistently highlight when they reflect on their GEM listing experience, and none of them are just about the money raised.

Access to International Capital at the Right Moment

Hong Kong connects your company to one of the deepest pools of institutional capital in Asia, alongside retail investors and family offices from around the world. For a company based in mainland China or Southeast Asia, that international visibility changes how customers, suppliers, partners, and talent perceive your business. The credibility of a Hong Kong listing travels further than the capital it raises.

Governance That Builds a Better Business

The GEM listing process forces you to build structures that most private companies delay too long — independent directors, audit committees, formal financial reporting systems, a compliance officer. Every founder I spoke to about this said the same thing: the process was demanding, but the business came out of it significantly stronger. Not just in terms of capital raised, but in terms of how professionally the whole operation runs.

A Defined Pathway With Clear Milestones

Having a streamlined route from growth enterprises market to the Main Board gives investors a story that has a next chapter. You are not asking them to hold a GEM stock indefinitely with no upgrade path. You are inviting them to participate in the growth phase of a company that has a clear and realistic road to Main Board status. That narrative attracts the right kind of long-term investor.

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Real Situations Where GEM Made the Difference

A Tech Company That Could Not Wait for a Domestic Approval

I researched several mainland Chinese technology companies that turned to GEM when domestic IPO approval timelines stretched to three and four years. Their businesses were growing fast, they needed capital to keep pace, and waiting was simply not viable. GEM gave them a Hong Kong listing with international investor access while their domestic application moved slowly through the queue. The capital they raised during that window let them accelerate product development and expand into markets that would have been out of reach without it.

A Research Business That Finally Had a Path

After the January 2024 R&D eligibility test arrived, a science-driven company I looked into could finally consider a Hong Kong listing. They had spent three years investing heavily in proprietary research. Revenue was growing year on year but operating cash flow was not yet positive. Under the old rules no listing was available to them in Hong Kong at any reasonable cost. Under the new R&D test they qualified. They raised the capital they needed, retained their entire research team through a funding period that would otherwise have forced painful cuts, and maintained the momentum that made them worth investing in.

A Family Business That Used GEM as a Launchpad

Not every GEM story involves a technology company. A traditional Hong Kong business I found in my research used GEM to formalise governance, raise capital for physical expansion, and improve how it was perceived by international suppliers. They never intended to stay on GEM permanently. Two years after listing they transferred to the Main Board using the streamlined mechanism. For them GEM was exactly what it was designed to be a structured beginning, not a permanent address.

How to Prepare for a GEM Listing

I found consistently that the companies which struggled most with GEM were the ones that treated the listing as a fundraising event. The ones that succeeded treated it as a business transformation that happened to raise capital at the end. These are the things that actually matter in preparation.

Choose your sponsor early and choose carefully. Your sponsor drives your entire listing timeline. Their experience with GEM specifically not IPOs in general determines how efficiently you navigate every step. Interview at least three candidates and ask each one specifically about GEM listings they have managed recently and what obstacles they encountered.

Sort your financial records before you engage anyone. Two years of audited accounts, prepared under Hong Kong Financial Reporting Standards or IFRS, need to be ready before serious preparation begins. Many founders underestimate how long bringing financial records to listing standard actually takes. Start this at least six months before you plan to engage a sponsor.

Write a business plan you can genuinely execute

GEM requires you to publish your business plan in your listing documents and then report against it publicly for two full financial years. Investors and regulators will compare your actual results to what you promised. A plan built to maximise your IPO valuation that you cannot actually deliver creates far more damage than a conservative plan that you beat.

Build governance before the pressure hits. Appointing independent directors, forming an audit committee, and hiring a compliance officer under listing timeline pressure leads to poor decisions about all three. Do this work deliberately, in your own time, before you submit your application.

Plan for seven to nine months. Some companies move faster with the right preparation and sponsor experience. But if you plan for nine months and finish in seven you look competent. If you plan for four and it takes nine, you burn through cash reserves and exhaust everyone involved.

What Goes Wrong and How to Avoid It

Treating disclosure as a compliance exercise. GEM runs on the principle that investors can handle risk if they have complete information. Companies that disclose the minimum required and nothing beyond it damage investor trust quickly. The most respected GEM issuers consistently disclose more than required, not less, because they understand that transparency is the entire foundation of what makes GEM work.

Choosing a sponsor on price. Listing costs are real and GEM companies are rarely flush with cash before an IPO. But a sponsor who undercharges almost always underdelivers on due diligence quality, regulatory relationships, and timeline management. The money saved on sponsor fees rarely covers the cost of a delayed listing, a rejected application, or post-listing compliance problems caused by gaps in the original due diligence.

Disappearing after the IPO. I see this happen repeatedly. A company works incredibly hard to list, raises its capital, and then becomes almost invisible to investors. Share price drifts. Trading volume dries up. The transfer to the Main Board never happens because nobody is paying attention to the stock. Investor relations is a core business function from your first trading day, not something you figure out later.

Where GEM and Hong Kong’s Capital Market Are Heading in 2026 and Beyond

The broader Hong Kong IPO market enters 2026 with extraordinary momentum. Over 300 companies have already filed listing applications, PwC forecasts 150 successful listings raising up to HKD 350 billion, and the pipeline includes large-cap issuers alongside a growing concentration of innovative technology and life sciences businesses.

For GEM specifically, I see three directions that will shape the platform over the next few years.

The R&D eligibility test will gradually reshape who lists on GEM. Deep tech, artificial intelligence, biotech, and advanced manufacturing companies that previously had no listing pathway in Hong Kong at this stage of development now have one. As awareness of this pathway grows among founders and advisers, expect the composition of GEM to shift meaningfully toward innovation-driven businesses with strong intellectual property foundations.

Mainland Chinese companies will continue looking to Hong Kong as their preferred international listing venue. The surge in H-share listings on the Main Board from 30 in 2024 to 76 in 2025, a 153% increase reflects how strongly Chinese companies want Hong Kong exposure. As that pipeline deepens, some of those companies will find GEM the right entry point while they build toward Main Board eligibility.

Conclusion

I came away from this research with a genuinely changed view of the Growth Enterprise Market. This is not a consolation prize for companies that could not make the Main Board. It is a purpose-built platform for companies that are building fast, growing hard, and need capital now rather than in three years. The 2024 reforms removed the features that were slowly killing it and replaced them with structures that actually support growth. Hong Kong’s IPO market is the strongest it has been since 2021 and the pipeline for 2026 is substantial. If you run a company with real momentum and honest governance, GEM deserves serious consideration. If you invest in growth-stage businesses, this is a market worth watching far more closely than most investors currently do.

FAQs

What is the Growth Enterprise Market and how is it different from the Main Board?

The Growth Enterprise Market is a second listing board on the Hong Kong Stock Exchange, designed for companies with strong growth potential that cannot yet meet Main Board entry requirements. The Main Board demands three years of operating history and passes companies through a profit test.

Who can apply for a GEM listing?

Companies incorporated in Hong Kong, mainland China, the Cayman Islands, Bermuda, or other jurisdictions that meet equivalent shareholder protection standards can apply.

What did the January 2024 GEM reforms actually change?

Four things changed meaningfully. First, the new R&D eligibility test opened GEM to innovation companies that invest heavily in research but do not yet show positive operating cash flow.

How long does a GEM IPO take from start to finish?

Seven to nine months is a realistic planning timeline from the point you engage your sponsor and begin serious preparation. Due diligence, document drafting, regulatory review, and the marketing period each take meaningful time.

Can a GEM company move to the Main Board?

Yes, and the 2024 reforms made this a real and usable pathway rather than a theoretical one. Two GEM companies completed transfers to the Main Board in 2025, and three more filed transfer applications with the first successfully trading on the Main Board in February 2025.

Is GEM a good market for investors?

GEM operates on a disclosure-first philosophy, which means investors carry more responsibility for their own due diligence than on the Main Board.