Mainland companies no longer need foreign exchange regulator’s approval to bring IPO proceeds back to China
Chinese regulators have simplified the process for approval of IPOs as the government seeks to increase private sector investment by cutting down on bureaucracy.
The China Securities Regulatory Commission announced on its website that companies no longer need approval from the foreign exchange regulator to bring back to China the proceeds of IPOs in overseas markets. It will also eliminate a requirement for foreign investment banks to be licensed and certified by Chinese authorities before they can be recruited to oversee the launch of IPOs domestically.
The move is part of a year-old plan to simplify the IPO process for Chinese companies and reduce bureaucracy. In December last year Chinese authorities reopened the mainland’s IPO market after a freeze of more than a year.
The freeze, which followed a listings boom that saw China lead the world’s IPO market as recently as 2010, raising $71 bn in proceeds, was prompted by authorities seeking to switch to a regulatory-based system from the approval-based system that held back IPO growth.
Mainland Chinese companies have raised $3.4 bn in IPOs so far this year, placing China 12th worldwide, according to data from industry analysis firm Renaissance Capital. In terms of the number of IPOs, China has placed fifth so far this year, with 16. Hong Kong, by comparison, is in third place by funds raised, at $15.6 bn, and is tied with the UK for second place in terms of number of IPOs, with 40.
In a further move toward regulatory easing, Chinese authorities earlier this month gave approval for a link-up between the stock exchanges of Shanghai and Hong Kong, allowing a daily net 23.5 bn yuan ($3.8 bn) of cross-border share purchases.
