Powerhouses such as Goldman Sachs have been ramping up their staffing, seeking to double or triple their headcounts in mainland China, as they expand to capture billions in potential profits in the world’s second-largest economy.Ĭhina’s Nasdaq-like STAR market has made it easier for technology firms to access funding at home, though it places an emphasis on companies focused on hardcore technology and innovation.Ĭhina’s dependence of foreign capital to fuel its businesses has decreased from where it was less than a decade ago, said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics. The tighter regulatory regime comes against a backdrop of China opening its financial market to allow foreign banks and asset managers to set up wholly owned firms. 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 $US500 million, bankers familiar with the matter said. 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.”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. 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 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 $US145 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.
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 the named discussing internal business. In all, China’s crackdown on overseas listing threatens about 70 other private firms based in Hong Kong and China that are set to go public in New York, according to data compiled by Bloomberg. Other deals that could be in doubt include Hong Kong delivery firm Lalamove’s potential $US1 billion IPO.
Podcast app Ximalaya’s US IPO is also in limbo, according to people with knowledge of the matter. Fitness app Keep has also opted not to go ahead with a planned US public filing, the Financial Times reported.
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