Chinese Regulatory Commission opens IPO 'green channel' shortcut - Who are the candidates?

Reuters reported that, based on information provided by six insiders, the China Securities Regulatory Commission is now considering to provide convenient route for certain large scientific and technological corporations, allowing them to skip a long line of companies waiting for the listing. Sources say that, potential candidates may include Alibaba Group's Ant Financial Service Group, Zhong’an Online Insurance, and Qihu 360.

What is the nature of this shortcut, exactly? Is it IPO or backdoor listing? The sources didn’t mention it specifically. However, from the perspective that, new regulations about refinancing have just been released, IPO is more likely.

'Green channel'

China has always been defeated by the New York Stock Exchange and Nasdaq with regards to scientific and technological corporations IPO. Enabling more IPO companies to stay in China, means that Chinese investment banks - which are leaders of domestic stock issuance market, can make a fortune.

At present, about 700 companies are waiting for the CSRC's (China Securities Regulatory Commission) IPO approval. While this regulatory agency has accelerated its approval process in recent months, companies still have to wait for 18 months or more before they can get financing. For those high-growth technology companies which urgently need money to expand their businesses, Chinese domestic market has become less and less attractive.

Last year, in September, the CSRC amended its regularities in order to give priority to corporations located in depressed regions, greatly accelerating their IPO approval process. This year, in January, corporations which benefited from the accelerated approval process included corporations in Xinjiang.

Sources say that, the CSRC has been communicating on this matter with technology companies for several months, but whether the IPO approval is to be accelerated for these companies is still undetermined.

The Ant Financial Services Group responds that, they have no comments regarding these rumors, and they have no plans for listing schedule or location.

Qihu 360's response is much simpler. A relevant person tackled this issue with "no comments."

Gossips

Last year, in April, Ant Financial Services Group completed their B-round financing with about $ 4.5 billion. New strategic investors including investing groups led by CIC Overseas, CCB Trust (a subsidiary of China Construction Bank), and A-round strategic investors such as insurance companies including China Life Insurance, China Post Group (the parent company of Postal Savings Bank), CBD Capital and Primavera Capital Group have also continued to invest. This is the world's largest private placement in internet industry so far.

So will Ant Financial Group seek opportunities for listing ?

On October 6, Hong Kong Economic Daily reported that Alibaba's affiliated company, Ant Financial Services Group, was preparing for listing in Hong Kong, intending to raise $ 10 billion capital (about HK $ 78 billion). According to inside news from the source of investment banks, the Ant Financial is communicating with the investment bank which was in charge of the listing of Alibaba in 2014, preparing for listing businesses in Hong Kong. Their temporary target is to be listed in the first half of next year.

The Ant Financial Services Group says the same thing - they have no plans for listing schedule or location. And, they will try to be in accordance with their development strategy and regulatory requirements, choose the most suitable place for listing.

Was Qihu 360’s "backdoor" listing in the A shares a joke?

From the CITIC Guoan Wine, Kunlun Wanwei, Hua Wen Media, Bird Stock, to the Tianjin Printronics Circuit with which Qihu 360 has a lot of equity links, and even companies like Sino-Microelectronics and Tongde Chemical who use codes containing Qihu 360, gossip went crazy.

In response to speculations and rumors about the return of Qihu 360, Zhou Hongyi, who had been "biting his teeth" and remaining silent because of regulatory requirements, finally restored some "open" facts in July last year. His explanation was: "After such a long time, we have successfully completed de-listing process in the United States. There are some things we can talk about."

"It lasted for more than a year, with a lot of hard work." Zhou Hongyi describes the way 360 will return. He added: "The greatest value of our return, for China, rests upon the internet security. That is, the largest domestic internet security company turning into a real domestic company.”

"There are countless people calling and sending messages to me every day, hoping to recommend me ways of backdoor listing." Zhou Hongyi says that it bothers him very much. "A rumor can create genuine turmoil. Don’t believe in any rumor." Zhou Hongyi emphasized repeatedly.

With regard to most problems in the capital market, as the Internet industry's famous "cannon", Zhou Hongyi is not trying to avoid questions. He admitted that, after the completion of privatization de-listing, 360 is now dismantling the VIE architecture, and it still has the business restructuring to implement, and "it takes time." Hence, the so-called "360 backdoor concept" in current A-share market can not be trusted. However, he also self-mockingly shared that, since 360 has borrowed 3 billion US dollars for their project of privatization, it has become the largest debtor in China. One could undoubtedly say that, the longer the listing period will last, the greater financial pressure they will have to bear.

Original article

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