Chinese technology teams leave IPOs at a record pace after pulling out the Ant List
Some record companies are abandoning attempts to list China’s response to Nasdaq as regulators step up their analysis of technology businesses after rejecting Ant Group’s initial $ 37 billion public offering.
This is an analysis of the Financial Times figures published by the Shanghai Star Market they started the fanfare In July 2019, 76 companies recorded IPO applications in March, more than double the previous month.
The cancellation surge pushes the number of discontinued attempts to list in the Star to more than 180. November, Beijing Month he pulled out Ant’s list due to concerns about the lending business, there have been only 12 IPOs canceled.
The repeal could hamper China’s efforts to develop land capital markets – a long-standing priority for Beijing’s policy as US law passed in December made it more urgent for Chinese groups remove it from Wall Street.
They also noted the turn of the Chinese authorities, who opted for a so-called registration-based system when it was launched with the personal support of President Star Xi Jinping.
Under the system, companies could be quickly listed on the Star list as long as the necessary financial statements are submitted to the China Securities Regulatory Commission. Experts say the CSRC is now backing that commitment.
“Star [Market] he really wanted to be a step on the path to reform – what is happening now is not for sure, “said Fraser Howie, an independent analyst and Chinese finance expert.” This should be a concern in China’s financial space, which is increasingly open and dependent on the market. some of them are going backwards. “
Chinese investment bankers say companies that wanted to list Ant in the first round as a result of Ant’s double IPO in Star and Hong Kong, which would be the largest in the world, have stricter regulatory requirements.
One person who is directly familiar with the CSRC’s enforcement strategy said it was doing so “after taking two steps back and taking three steps”. They warned that Star’s IPO slowdown could last until the end of 2021.
An investment banker based in Shenzhen said his company has suspended several IPOs this year from the CSRC, now asking regulators to question how some peppery companies calculate certain business metrics. Executives must disclose all their personal bank accounts and be prepared to explain any transaction in excess of Rmb30,000 ($ 4,600).
Zhejiang Qizhi Technology, a provider of network security solutions, withdrew its IPO application from the market in March, after regulators received 28 questions about whether it was dependent on its uneven valuation and revenue for the top five customers.
“The regulator has now shrunk,” the banker said, adding that the IPO review process is so lengthy that many companies have had to increase their banking group. This has “significantly increased list costs, and pushed many companies to move away.”
The number of companies waiting to be listed in China has risen to nearly 2,300, according to data provider East Money Information, which is expected to take around four years in 2020 based on the pace of IPOs.
The study of IPOs is growing as official concerns grow as a flood of listings could absorb liquidity from the Chinese stock market. global laggard this year.
Beijing has an increasing priority over the lists of certain technology companies, such as those in important strategic areas. especially semiconductors – It could further reduce the number of lists allowed for IPOs on the Star list, said Thomas Gatley, an analyst at Gavekal Dragonomics.
“They see that there’s less money, and they really want to go where they want to go,” he said.