Global investment banks are rushing to redirect initial public offerings from Chinese groups to Hong Kong after new cybersecurity rules instituted by Beijing cut off lists of lucrative technologies that were previously heading to New York.
About 20 Chinese companies had publicly announced their intention to raise $ 1.4 billion from the sale of shares in New York this year, according to data from Dealogic. But that was before Beijing regulators launched an investigation into Didi Chuxing, just days after the Chinese rideshare group’s $ 4.4 billion IPO in New York. News of the investigation caused Didi’s shares to drop 20% from the price of its IPO.
The intervention of Chinese regulators has cast doubt on other U.S. listings and sparked a rush to redirect the deals. Advising Chinese companies on IPOs has been a lucrative business for banks, including Goldman Sachs and Morgan Stanley, generating $ 460 million in commission income in the first half of the year.
“We talk to everyone about it. All Chinese issuers considering IPOs in New York are looking at whether they can pivot to Hong Kong, ”said a senior capital markets banker in Hong Kong.
Strict listing rules in Hong Kong, such as minimum profitability requirements, meant that many companies would struggle to sell shares in the territory, the banker said. “If you want to make a deal this year, at best you will be delayed until 2022 and at worst you won’t be able to.”
In the first half of the year, 34 Chinese companies raised $ 12.4 billion in New York IPOs, a record in both cases, helping to prop up commission income for U.S. banks amid U.S.-China tensions. were getting worse. More than $ 2 billion in stocks are already trading in New York.
Hong Kong seemed to offer a good alternative, bankers and lawyers said, as Beijing’s control over the financial center meant it would be less affected by new foreign listing rules that affected sales of shares in New York.
Data security issues, highlighted by the Didi shock, are at the center of the Chinese crackdown. Days after the ill-fated IPO, the Cyberspace Administration of China, or CAC, launched a review of cybersecurity at the company.
Senior officials in Beijing then called for a new regulatory regime to control overseas IPOs, and the CAC proposed rules prohibiting companies with more than one million users from registering with the foreigner without security screening or official authorization.
Two Wall Street bankers in Hong Kong said companies with a large data component in their operations were among the fastest moving their listing plans to Hong Kong and swallowing the delays and associated costs. “If you don’t have a data angle, they’ll wait until things calm down and see. The problem is, no one wants to be first, ”said one banker.
Chinese tech groups that have gone public have long favored New York for its deeper, more liquid markets and ease of listing compared to Hong Kong, where companies are controlled by both the city’s securities regulator and the stock exchange. . Bankers also benefit from a 5 to 7 percent higher fee on funds raised through the sale of stocks in the United States, compared to around 2 percent in Hong Kong.
Bruce Pang, head of research at investment bank China Renaissance, said Chinese listings in New York would suffer until details of the regulatory regime were disclosed to a dozen Chinese regulators – after which it could take months for companies seeking to register overseas to gain approval.
Pang added that a growing number of Chinese companies are facing an urgent need to go public. “If they can’t wait, Hong Kong will be their only choice,” he said.
The main beneficiary of the rules has been Hong Kong Exchanges and Clearing, whose shares have jumped 14% this month.
The Hong Kong Stock Exchange appointed its first non-Chinese CEO this year, Nicolas Aguzin, a former JPMorgan banker born in Argentina.
Aguzin will be responsible for maintaining the attractiveness of HKEX with mainland Chinese issuers, which represent more than 80% of its equity, while improving its image with foreign issuers, which have largely disappeared since a wave of luxury products, including Prada and Samsonite, listed a decade ago.
However, a senior HKEX executive said that while the exchange could benefit in the short term from backdoor IPOs, “the direction of travel does not look good.”
“Right now the screws are on the issuers, but the next logical step is to screw the investors,” the executive said. “I predict that governments and regulators will make it harder for this capital to flow.”
The mention sources can contact us to remove/changing this article
What Are The Main Benefits Of Comparing Car Insurance Quotes Online
LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos
to request, modification Contact us at Here or [email protected]