And Scene: LBOd Chinese Companies Up Creek With No Market

From the "you could have seen that one coming a mile away" files:

Caixin: Plans for New Board Dropped, Leaving Overseas-Listed Firms in Limbo
The government's sudden decision not to establish a new board on the Shanghai Stock Exchange anytime soon has left many overseas-traded Chinese tech firms that planned to switch to the bourse in limbo.

Changes to a draft of the latest five-year plan, which sets policy priorities from 2016 to 2020, show the government no longer considers creating a board for mostly high-tech companies important.

The plan that was passed by the National People's Congress on March 16 lacks any mention of the new board. A draft that was submitted for discussion when the legislature opened its meeting on March 5 contained a proposal for setting up the new board for companies in "emerging industries of strategic significance."

The change means the central government is unlikely to pursue establishing the board for at least another five years.
It never made any sense to delist, since a company can list its shares on multiple exchanges. Second, the companies were chasing a bubble that was doomed to pop. Third, China has at time shut off IPOs.

Finally, the kicker: some of the companies that went private did LBOs.
"There are many Internet industry funds that specialize in helping overseas-listed firms go private and many of them are leveraged," he said. "The board being canceled will postpone the relisting of the companies they invested in. And the longer they wait, the greater the risk."
The Economic Observer discusses the ripple effects: 战略新兴板停摆涟漪. Backdoor listings via shell companies may be the path some companies take:
In CICC Gang opinion, the concept stocks you want to return to A-share market, there can be direct listing (motherboard, GEM or three new board) or motherboard backdoor. Taking into account the direct listing of the required queued time, and the profitability of listed companies, the actual controller, as well as higher requirements and other aspects of time going directly Main Board and GEM listed company takes stock for some not particularly realistic.

However, the Economic Observer newspaper was informed that since the war Hing plate remained on paper, most of the concept stocks still do IPO and the backdoor hands ready, after all, there are ready-made backdoor operation mode to follow. Previously, the giant network backdoor Century Cruise, science and technology SouFun shares backdoor Miles, Focus Media backdoor Hedy Holding, are touted by the market. "Many shall share in return there are performance and time to market for gambling on gambling, consumption can not afford the time, so the probability of them would choose backdoor listing." Shanghai, a senior investment bank, told the Economic Observer reported, since the pre-registration system and other effects , IPO market is expected to be relatively simple and therefore relatively light shell resource market. But the situation changed again clear logical speculation shell resource. On the other hand, since the general concept stocks huge volume, good performance, can be recorded in the backdoor listing after big gains, so many shell companies are happy with the deal. "For a number of shell companies, if the Big Mac backdoor, discuss everything, even willing to lose, because the boss knows that his hands retained shares will receive great appreciation." Shanghai, a senior intermediaries for Economic Observer reported.

Indeed affect the whole body. "Establishment of strategic emerging industries board" day of expression is removed, the shell company sought after by the market, money started pouring small cap companies, many stocks ushered in returning to the rise.

No comments:

Post a Comment