China's securities regulator to resume IPOs

The Chinese Securities Regulatory Commission (CSRC) said in a statement that 28 companies - which had already been approved for new listings before the freeze began - will comprise the first batch to list on the domestic bourses. It will take about two weeks for them to prepare for the resumption.

The regulator added that about 10 of the 28 will go public by the end of this month, while the rest will list before the end of the year.

The new offerings will be made under a revised listing system, with investors no longer be required to deposit funds when applying for new share subscriptions. The approvals process will also be simplified in order to reduce costs for smaller candidates - companies can avoid the bookbuilding process if they offer fewer than two millions shares. Furthermore, share issuers and the main underwriters can directly set the prices for listings.

The CSRC officially ended a 14-month embargo on domestic new share offerings in January 2014. The embargo was in part driven by a desire to alter the listing system, improve information disclosure and ensure a high quality of listing candidate.

PE exits in 2014 were the fourth-highest on record, coming in at $12.9 billion, with shares sold at IPO accounting for $2.99 billion (although Alibaba Group and JD.com's US offerings accounted for 80% of this). The Shanghai and Shenzhen A-share markets, plus Chinext and the SME Board, saw 62 PE-backed offerings generate total proceeds of $614 million last year.

The wave of IPOs carried through to July of this year, with 75 more PE portfolio companies going public. It coincided with a 59% gain in the Shanghai Composite Index between January and mid-June - public market exits accounting for over half of total transaction value - and the announcement of a slew of capital markets-friendly reforms, including revisions to the listing process.

However, in July macroeconomic concerns prompted a massive slump in the domestic markets, which in turn hit Hong Kong and other bourses. About half of the stocks listed in Shanghai and Shenzhen voluntarily halted trading. Then the plug was pulled on new offerings.

Private equity investors responded by looking at alternative liquidity options, with trade sales in particular getting more traction.

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• Topics
• Greater China
• Exits
• Regulation
• China
• Exit
• IPO
• regulation