Chinese Regulators Vow to Bring Quality Deals to Market

The Chinese securities watchdog updated three draft regulations last week. For investors, it means both opportunity and challenge.

Investment bankers in China scrambled last weekend to update their clients about new opportunities in the Chinese IPO market.

Late on August 23, the China Securities Regulatory Commission (CSRC) issued a draft regulation, allowing listed companies to list their spin-off subsidiaries domestically.

This is a groundbreaking event, as spin-offs from Chinese listed companies have not been able to list on the A stock market before. For investors, it increases their visibility of potentially valuable assets under big conglomerates and gives them more opportunities for direct investment.

“We are looking into the possibilities,” one investment banker in Shanghai told FinanceAsia. “It is good for us as it allows us to have more proposals for our clients.”

The draft regulation allows companies which are listed and have been profitable for three years to split up their business. A subsidiary can only be spun off if it contributes less than 50% of the parent company’s profits. The regulation also bans financial businesses from being split up from the parent company and floated as a separate company.

Apart from splitting up subsidiaries, CSRC also released draft regulations to dictate how STAR Market companies can restructure their assets. It gives more freedom for companies that … [read more]

 

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