2018-06-07

China Wants Tech Giants to List on Mainland

Reuters: China allows domestic fundraising for overseas-listed firms
China is encouraging overseas-listed Chinese companies to launch secondary listings in the domestic market through the issuance of China Depositary Receipts (CDRs), modeled on the popular ADRs used in the United States.

The trial rules, which are effective immediately, will provide the “institutional foundation” for innovative companies to issue CDRs on the domestic market, the China Securities Regulatory Commission said.

The CSRC statement said the program would support innovative companies that comply with “national strategies” and have “mastered key technologies”.
China already approved mutual funds specifically for CDRs.

Reuters: China funds get greenlight to back domestic tech giant listings
The six listed open-ended funds (LOF), with a lock-up period of three years, will be allowed to become “strategic investors” in upcoming listings of high-tech firms.

Like cornerstone investors in overseas markets, strategic investors in Chinese IPOs seek long-term gains from companies with growth potential, Shi Bo, vice general manager at China Southern Asset Management, said in a statement.

China is encouraging overseas-listed Chinese companies to launch secondary listings in the domestic market through the issuance of China Depositary Receipts (CDRs), modeled after the popular ADRs in the United States.

Firms planning China listings include Xiaomi [IPO-XMGP.HK], U.S.-listed Alibaba Group Holding Ltd (BABA.N) and JD.com (JD.O).
Since A-shares have relatively high P/E ratios, this may end up subsidizing foreign investors at the expense of Chinese investors. It will also give Chinese tech companies a fundraising edge versus their competitors.

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