After Beijing’s new cybersecurity rules suspended the lucrative tech IPOs that had previously traveled to New York, global investment banks are racing to shift the Chinese group’s initial public offerings to Hong Kong.
Dealogic data shows that about 20 Chinese companies have publicly disclosed plans to raise $1.4 billion through stock sales in New York this year. But that was before the Beijing regulator launched an investigation into Didi Chuxing, and just a few days after the Chinese ride-hailing group went public for $4.4 billion in New York.Investigation news sent to Didi shares Down 20% Judging from its IPO pricing.
The intervention of Chinese regulators triggered Further U.S. listing in doubt And it triggered a scramble for redirected transactions.Advising Chinese companies on IPOs has always been Profitable business Banks including Goldman Sachs and Morgan Stanley had fee income of US$460 million in the first half of the year.
“We are talking about this with everyone. All Chinese issuers planning an IPO in New York are considering whether they can switch to Hong Kong,” said a senior capital market banker in Hong Kong.
The banker said that Hong Kong’s stringent listing rules, such as minimum profit requirements, mean that many companies will find it difficult to sell shares in Hong Kong. “If you want to reach an agreement this year, the best case is to postpone it to 2022, the worst case is that you can’t do it.”
In the first half of the year, 34 Chinese companies $12.4 billion raised In the New York IPO, both indicators hit record highs. Even when tensions between the United States and China worsen, they will help support Bank of America’s fee income. Stocks worth more than 2 trillion U.S. dollars are already traded in New York.
Bankers and lawyers said that Hong Kong seemed to offer a good choice because Beijing’s control of the financial center meant that it would be less affected. New rules for overseas listing This has already hit New York stock sales.
The data security issue caused by the impact of Didi Chuxing is at the core of China’s crackdown.A few days after the ill-fated IPO, Beijing’s State Internet Information Office (CAC) launched a Cybersecurity review Enter the company.
Senior officials in Beijing subsequently called for the establishment of a new regulatory system to regulate overseas IPOs, and CAC proposed rules that prohibit companies with more than 1 million users from listing overseas without security review and official permission.
Two Wall Street bankers in Hong Kong said that companies with large amounts of data in their business are one of the companies that transfer plans to Hong Kong the fastest and bear the associated delays and costs. “If you don’t have a data perspective, they will wait until things calm down before looking at it. The problem is that no one wants to be the first,” said a banker.
Compared with Hong Kong, listed Chinese technology groups have long favored New York because it has a deeper, more liquid market and easier listings, and Hong Kong companies accept the city’s securities regulators and securities trading at the same time. All review. Bankers also enjoy higher fees of 5% to 7% for funds raised by selling US stocks, while fees in Hong Kong are about 2%.
Bruce Pang, head of research at investment bank Huaxing Capital, said that before the details of the new regulatory system are finalized among about a dozen Chinese regulators, China’s listing in New York will be affected—after that, companies wishing to list overseas may need to Approved within a few months.
Pang added that more and more Chinese companies are facing the urgent need to go public. “If they can’t wait, Hong Kong will be their only choice,” he said.
So far, the biggest beneficiary of the new rules is the Hong Kong Exchanges and Clearing, whose shares have risen 14% this month.
The Hong Kong Stock Exchange this year appointed the first non-Chinese chief executive Nicolas Aguzin (Nicolas Aguzin), a former JPMorgan Chase banker who was born in Argentina.
Aguzin’s mission is to maintain the Hong Kong Stock Exchange’s attractiveness to mainland Chinese issuers that account for more than 80% of its equity, while making it more attractive to foreign issuers, who are involved in a series of issues including Prada and Samsonite. After that, luxury goods basically disappeared and went on the market ten years ago.
However, an executive from the Hong Kong Stock Exchange said that although the exchange may benefit from a diversionary IPO in the short term, “the direction of the move does not look good.”
The executive said: “At present, pressure is being put on issuers, but the next logical step is to put pressure on investors.” “I predict that the government and regulators will make it more difficult for capital to flow.”