China regulator studying issue of overseas-listed firms delisting to list in China

China‘s securities regulator said it is analysing the potential impact of overseas-listed Chinese companies coming home to relist on mainland exchanges, potentially bad news for tech firms trying to come home and cash in on high valuations.

The valuation gap between the domestic and overseas market and speculation on shell companies should be paid attention to, Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission (CSRC), said at a weekly briefing on Friday, according to remarks posted on CSRC’s official Weibo microblog.

The CSRC is studying the market impact of overseas-listed Chinese companies relisting in the A-share market through IPOs, mergers and acquisitions, as well as restructuring, Zhang added.

The regulator made the comments following rumours that it would block domestic listings by companies currently listed overseas, the Shanghai Securities News reported.

“For companies already in the process of relisting at home, the faster they get done the better because regulatory uncertainties are rising,” said a banker, who declined to be identified because they were not permitted to speak to media.

“We may also suggest that some clients opt for the new third board, given that there are fewer regulatory hurdles.”

The news may reassure Chinese stock investors, who worry that battered domestic markets are in no condition to absorb another round of IPOs by hot tech companies, seen as cannibalising funds from already-listed companies and weakening overall market performance.

Domestic media have reported at least 20 Chinese firms listed overseas are considering delisting to come back and relist in China, some of them via “back-door listings” or “reverse mergers” that involve injecting assets into an already listed firm, thus skipping the long approval queue for IPOs.

An overall dilution in share values is a point of particular sensitivity as a flood of new IPOs was widely blamed for contributing to a massive stock market crash last summer.

Any move by the regulator could affect the wave of Chinese companies, particularly in the tech sector, who last year decided to de-list from U.S. stock exchanges and instead trade on domestic boards, a trend that intensified as Chinese stock markets rallied through mid-2015.

Those firms include Internet security and search firm Qihoo 360 Technologies Co Ltd, and dating app Momo Inc , backed by Alibaba Group Holdings Ltd, both of which said they plan to delist.

Qihoo declined to comment when contacted by Reuters. Repeated calls to Momo offices were not answered.

Other Chinese companies have already raised funds and gone private on the expectation that they would be welcomed at home.

Domestic tech tickers still enjoy extremely high valuations relative to global peers, some of them in triple digits.

The ChiNext Growth Board boasts an average price earnings ratio of 65, compared with 21 for the Nasdaq 100

Also read:

China, India & Singapore: places where healthcare startups go to flourish

China Inc waves long goodbye to Hong Kong bourse

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.