Business / Markets

IPO approvals start rolling in

By Cai Xiao (China Daily) Updated: 2014-01-03 02:25

On the 11th floor of the Fukai Building in Beijing's Financial Street, representatives of securities firms are waiting for special documents — written approvals from the China Securities Regulatory Commission for new share issues.

At midnight on Monday, the CSRC gave the good news to the representatives of five companies out of 82 that had finished the IPO review and approval process. Another six companies got their written approvals the next day.

Shanxi Coal and Chemical Industry Group Co Ltd and Neway Valve (Suzhou) Co Ltd will go public on the main boards at the Shanghai Stock Exchange.

Three others, including Guangdong Xinbao Electrical Appliances Holdings Co Ltd, will list on the small and medium-sized enterprises board at the Shenzhen Stock Exchange.

The remaining six, including Chengdu Tianbao Heavy Industry Co Ltd, will raise funds on the ChiNext Board in Shenzhen.

Subscriptions for all the issues began on Jan 8. In all, 50 companies will go public this month, according to the CSRC.

Zhang Bo is from Northeast Securities Co Ltd, lead underwriter for the IPO of Chengdu Tianbao Heavy Industry. Starting on Friday, his team will hold a three-day roadshow for the company in Beijing, Shanghai and Shenzhen.

"The first 50 IPOs will attract many investment funds, because the applicants went through strict financial verification by the regulator last year, and the share pricing is strictly regulated by the new rules," Zhang told China Daily.

To control prices, the new rules state that the issuer and underwriter must cancel the highest offer price from investors and 10 percent of the shares offered at that price.

Another representative from a securities firm who declined to be identified told China Daily that one outcome of the new rules was that prospective issuers must be careful when they submit IPO applications. Material sent to the CSRC becomes public immediately.

"The market is a significant determinant of a company's performance in the Chinese stock market," he said.

The Rongda Weiye print shop, which specializes in IPO applications, saw orders start coming in as soon as the CSRC began issuing final approvals on Monday.

The CSI300 Index, which covers the leading Shanghai and Shenzhen A-share listings, fell 0.4 percent on Thursday, while the Shanghai Composite Index was down 0.3 percent at 2,109.38 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, rose 2.19 percent to 1,333 points.

Hong Hao, managing director and chief strategist at BOCOM International Holdings Co Ltd, told China Daily that the companies going public on the ChiNext Board offer good growth prospects and have smaller financing demand, so they'll be popular with investors.

"They are positive of people's confidence in the ChiNext Board, which explains today's stock market declines," said Hong, adding that the resumption of IPOs will divert capital from the secondary market.

Liu Yiping contributed to this story.

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