Chinese regulators set limits on fintech IPOs
April 20, 2021 Category China News Round-up, Weekly
China’s securities regulator unveiled revised guidelines on qualifications for listings on the NASDAQ-style sci-tech board in Shanghai, which set limits on fintech IPOs and bar financial investment firms from seeking a listing in the market. The regulator wants to align the Shanghai market with China’s push for breakthroughs in cutthroat technologies, market watchers said. The updated guidelines might sink hopes for Ant Group to rekindle its pulled IPO under its current organizational structure, but the financial holding firm could still list its sci-tech part in the market. The revised system for evaluating the sci-tech attributes of firms filing for an IPO in the STAR Market in Shanghai creates a negative list, and imposes strict limits on industries eligible for Star Market listings, Li Weiyou, Deputy Director of the Department of Public Offering Supervision at the China Securities Regulatory Commission (CSRC), said at a press conference.
Firms engaging in six industries including new-generation information systems and high-end equipment will be supported to float on the market. Companies falling under fintech innovation will have their IPO plans combed through and their listings in the Shanghai market will be restricted, according to the CSRC official. Real estate firms and those principally engaging in financial investment will be banned from floating on the Shanghai market. The revised guidelines took effect on a trial basis on April 16 as an update to the rules that were initially announced in March 2020. The revision suggests Ant’s suspended IPO may never be rekindled, judging by its existing business lineup, Dong Shaopeng, Senior Research Fellow at the Chongyang Institute for Financial Studies of Renmin University of China, told the Global Times. The Alibaba fintech offshoot’s dual IPOs in Shanghai’s STAR Market and Hong Kong were suspended in early November ahead of their planned debut, after Alibaba’s management was grilled by financial regulators.
Ant will apply to transform itself into a financial holding company as part of a multifaceted rectification plan, Pan Gongsheng, Vice Governor of the People’s Bank of China (PBOC), announced. In a sign that it is becoming more difficult for fintechs to list on the Shanghai board, Chinese online retailer JD.com’s fintech unit withdrew its filing for an IPO in the STAR market earlier in April. The Hong Kong market is still open to fintech IPOs, although Chinese fintech firm Bairong’s debut in Hong Kong at the end of March turned out to be a disappointment with its shares plunging 16% on IPO day, rendering it the worst debut among IPOs topping USD500 million in the Hong Kong market in three years, the Global Times reports.
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