The significance of the recently closed IPO of Chinese carmaker Dongfeng Motor Group is likely to go well beyond its strong debut on the HKSE, as well as its international offering within and outside the US.

While law firms from the PRC, the UK and the US helped Hubei-based Dongfeng become the first state-owned motor vehicle manufacturer to list in Hong Kong - where it raised HK$4bn (US$512m) in a global offering of some 2.48 billion shares - the SAR's entire listing regime had to be redesigned for the protection of investors to accommodate joint venture companies coming out of China.

The architect of the redesign was Herbert Smith, which advised joint sponsors China International Capital Corporation (CICC), Deutsche Bank and Merrill Lynch on both the Hong Kong and US law aspects of the IPO - which closed on 7 December at HK$1.74, up 8.8% from its offer price of HK$1.60.

Partner Ashley Alder led the UK firm's Hong Kong team, with fellow Hong Kong-based partner Kevin Roy (pictured) leading its US team. Partner Jim Wickenden in London provided support. Haiwen & Partners advised the sponsors on matters of PRC law with partner Zhao Qian leading its team.

Dongfeng Motor Group meanwhile turned to a Slaughter and May team led by partner Benita Yu on matters of Hong Kong law, a Debevoise & Plimpton team led by partner Tom Britt on US law, and a Commerce & Finance Law Offices team led by partner Di Xiaofeng on PRC law.

Herbie's US partner Roy said the deal was groundbreaking because Chinese auto manufacturers operate through 50/50 joint ventures with foreign partners. Producing vehicles through JVs with Nissan Motors, Honda Motors and Peugeot Citroen, Dongfeng was the first company to be listed in Hong Kong with this JV structure.

"This deal was probably the most innovative we've done this year in terms of structure," he said. "It was difficult in that the assumption is that most listed companies are not JVs. What we had to do was the groundwork for listing a JV. We had to design a new listing regime to have it listed, which meant a lot of heavy negotiation with the regulators."

Roy said that unlike Singapore, which tends to be a bit more relaxed over its listing regime for international companies for strategic reasons, Hong Kong wants to be China's premier capital market - so the UK firm's team designed the new listing regime in a way in which the HKSE could be confident that there were sufficient mechanisms in place for investor protection.

"It was incredibly important to design a robust regime so that auto companies can list in Hong Kong. And China companies are pushing up to be half the market cap on the HKSE so you have to get the regulation right."

Roy added: "It was critical that the Hong Kong market was certain about this structure, which was designed in the main to deal with investor protection."

Roy predicted the deal would pave the way for more listings - from companies with similar structures - from the rapidly growing automotive industry in China. "We've done the first one and so feel we are well placed for more. In fact, I don't think that other law firms would know how to do it."

Now the largest overseas-listed car manufacturer in the PRC, Dongfeng Motor Group produces commercial and passenger vehicles, auto parts and components and vehicle manufacturing equipment. It has facilities mainly in Wuhan, Shiyan, Xiangfan and Guangzhou and is the leading player in commercial heavy and medium vehicles in China, with a market share of over 30%. By the end of 2004, the company's assets were US$7bn, with a total workforce of 117,000. It will use the proceeds from the IPO to finance the prepayment of certain bank loans.