In an effort to lure some of its largest overseas-listed tech giants back to the local capital market, China Securities Regulatory Commission (CSRC) is exploring to allow foreign-listed tech companies to relist in the country through financial certificates, reports South China Morning Post.
The financial regulatory body is mulling over issuing China Deposit Receipts (CDRs) – think of ADRs – certificates issued by a Chinese bank representing a pool of shares in an overseas stock that is tradeable on domestic exchanges.
Companies including Alibaba, Baidu, JD.com, social media Weibo and portal and games operator NetEase, are said to be the first batch of U.S.-listed Chinese tech juggernauts to float on local bourses through CDRs, as reported by local media Caixin.
Instead of just bring back home already listed companies, Beijing is also making efforts to let some yet-to-float unicorns stay at home in the first place, including Didi Chuxing, Meituan-Dianping, and Toutiao, all are long-tipped for a potential listing outside of China previously.
In the past years, we have seen many Chinese concept stocks coming home for A-share, as relisting at home helps these companies to cash in on a higher valuation.
For example, Internet security company Qihoo 360 and gaming company Giant Interactive Group, delisted respectively in 2016 and 2014, have almost quadrupled their market capitalization after an A-share refloat. Their businesses are almost solely operated in China and apparently local investors understand them and their businesses better.
The push from the government resonates with Chinese tech tycoons. Baidu CEO Robin Li said the country’s largest search engine would list in China as soon as it was allowed, according to South China Morning Post: “It has always been our hope to list as a whole on the mainland because our primary users and primary market are all in China. It would be ideal if our primary shareholders could be too.”
WANG Xiaochuan, Sogou CEO echoed Robin’s sentiment. “For internet companies, most of our market and users are in China,” said WANG on the first day of the Chinese People’s Political Consultative Conference, “To get listed at home would form a bigger synergy.” WANG’s company runs the second largest search engine in China and has raised USD 585 million in its US IPO last November.
In an earlier media report by Finance.qq, CSRC is greenlighting unicorns in biotech, cloud computing, AI, and high-end manufacturing, to get listed within a shorter period of time and possibly to relax the profit-making requirements.
The mainland regulators’ move coincides with Hong Kong’s attempt to attract mainland tech companies to list there. The special administrated region has been working on a reform to accept duo-class shares, which is favored by many Chinese tech companies as it keeps the company founder in control after the float.
In 2018, much-anticipated listings including smartphone manufacturer Xiaomi and Tencent Music Entertainment.