HONG KONG - More than a year after China pledged to smoothen the process for offshore listings, firms are reeling from a regulatory logjam that is unlikely to ease soon, and staring at the prospects of sharply lower valuations even as market sentiment improves.
A lack of such deals, as a result of China's regulatory crackdown as well as volatile capital markets and geopolitical tensions over the past couple of years, has resulted in bank layoffs and weighed on returns for private equity funds. The China Securities Regulatory Commission , which unveiled rules for boosting oversight of offshore listings last March, had approved just one IPO until May 24. The regulator's website on Friday showed it has approved seven more filings.
Since the implementation of the offshore listing rules, the CSRC has"actively and orderly" processed the IPO applications, and the number of companies that have completed filing has increased each month, the regulator said.CSRC approval, referred to as completion of IPO filings, is the regulatory go-ahead a company needs before launching an IPO - a process that ended years of laissez-faire approach to overseas fundraising.
The lengthy regulatory process comes on top of China's slowdown and a property sector crisis, which have made both issuers and investors wary about equity offerings and company valuations.) Industrials, a VIE-structured company, whose Hong Kong listing application was filed more than a year ago, is still awaiting approval pending supplementary materials, a regulatory disclosure shows.