PE-backed Chinese firms delay IPOs as CSRC tightens oversight
At least five Chinese companies – three of which have PE backers – have postponed their IPOs as the Chinese Securities Regulatory Commission (CSRC) released measures to strengthen supervision of public offerings.
The three PE portfolio companies are Ciming Health Checkup Mangement Group, a medical-examination services provider, digital surveillance systems provider Netposa Technologies and NSFocus Information Technology, a network sercurity services specialist.
They are among 50 companies that are expected to receive CSRC approval to list on mainland stock exchanges after the year-long IPO lockdown came to a close at the end of December.
The postponements come in response to a regulatory statement issued on Sunday that random inspections will be carried out on companies during book-building and roadshows. If an issuer and lead underwriter are found to have used information other than what is disclosed in the prospectus, the CSRC will stop the IPO and penalize the parties involved.
Meanwhile, the issuer and lead underwriter should publish special risk alerts for three weeks ahead of an online subscription if the proposed price-to-earnings ratio exceeded the average of its listed peers.
When the CSRC announced in Decemerber that the IPO markets would re-open, it said there were more than 760 companies with listing applications pending. According to Ernst & Young, the initial group of 50 could raise around RMB40 billion, while fundraising could reach RMB200 billion for 2014 as a whole.
Ciming secured RMB35 million ($6 million) from CDH Investments in 2006 and then Tiantu Capital committed in a RMB50 million three years later, according to AVCJ Research.
Netposa received more than RMB55 milion in 2009 from China Sciences & Merchants Venture Capital Management and Intel Capital, while NSFocus Information Technology has raised at least five rounds of financing since 2002.
The company's backers include Hong Kong-based technology investment firm imGO Limited, Legend Capital, Swedish VC firm Investor Growth Capital Asia and Leadyond Capital.
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