In mainland China, fees for listing on Shanghai's tech-heavy Star board are about equal to the US, but sponsors are required to co-invest in between 2 per cent and 5 per cent of the shares issued by their clients, an unusual arrangement that may limit interest in leading deals due to the need for a capital base onshore. That increases by about two percentage points or more for deals below US$500 million, bankers familiar with the matter said. The rerouting will undercut fees banks can earn after a decade in which Chinese firms raised about US$76 billion through first-time share sales in the US.īanks typically charge about 1.5 per cent to 2 per cent for billion-dollar offerings in Hong Kong, compared with 3 per cent to 5 per cent in the US, as fees vary with sectors and underwriters. "Currently the HK IPO pipeline is ridiculously vibrant." "Some Chinese companies that operate in sensitive sectors might be thinking of listing in Hong Kong instead of the US," said Haitong International equity capital markets managing director Kenneth Ho. If IPOs of Chinese unicorns grind to a halt, the Hong Kong exchange should still be boosted by secondary listings and the conversion of American depository receipts, according to Bloomberg Intelligence analyst Sharnie Wong. Hong Kong looks well placed to benefit from the geopolitical and regulatory frictions, though dealmaking in the financial hub may also become entangled in the regulatory push. The Cyberspace Administration of China said on Saturday that its proposed review would address risks for data to be "affected, controlled, and maliciously exploited by foreign governments". The China Securities Regulatory Commission is now leading efforts to revise overseas listings rules that would require VIE firms, which do business in China but are registered in places like the Cayman Islands, to seek approval before selling shares overseas, Bloomberg has reported.
For two decades, China's technology giants have sidestepped restrictions, using the so-called Variable Interest Entity (VIE) model to attract foreign capital and IPO offshore.
So far this month, the Nasdaq Golden Dragon Index - which tracks some of the biggest Chinese firms listed in the US - has shed some US$145 billion in value.Īt the heart of the recent crackdown is how far regulators will go to check foreign investment in sensitive industries, particularly those controlling vast amounts of data. Its investors include Alibaba Health Information Technology Ltd, MBK Partners, New Enterprise Associates and Temasek Holdings Pte, a preliminary filing showed.Ĭhinese companies have raised about US$13 billion through first-time share sales in the US this year, Bloomberg data showed.ĭidi’s IPO was the second largest US listing by a Chinese firm on record, after Alibaba Group Holding Ltd’s (阿里巴巴) US$25 billion blockbuster debut in 2014.Valuations for China's technology firms, which were already falling before the recent onslaught, now look shakier as investors signal they will demand steeper discounts to buy shares, said one banker, asking not to be named discussing internal business. LinkDoc, founded in 2014, provides cancer-focused healthcare services built on big data and artificial intelligence, its Web site shows. Reuters reported LinkDoc’s IPO halt earlier yesterday.Ī representative for LinkDoc declined to comment. LinkDoc’s IPO delay also comes as Chinese regulators are planning rule changes that would allow them to block a Chinese company from listing overseas even if the unit selling shares is incorporated outside China, closing a loophole long-used by the country’s technology giants, Bloomberg News reported this week. Shares of Didi Global Inc plunged after the government ordered the removal of the ride-hailing giant’s app from local app stores within days of its US$4.4 billion US IPO.
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