China tightens approvals of IPOs
Equities Rejection rate doubles after CSRC names new examinatorsBY KEN WANG, FIONA LAUThe rejection rate of Chinese IPO
applications has nearly doubled
since a new slate of examinators
took over at the end of
September, putting fresh hurdles
in the way of domestic listings.
In October, the first month
since the China Securities
Regulatory Commission’s
revamped issuance examination
committee took office, six out
of 25 A-share IPO applications
were denied, for a rejection rate
of 24%.
In contrast, only 13% of
applications were rejected in the
first nine months of the year.
The CSRC inaugurated the17th session of the issuance
examination committee on
September 30, with a completely
new membership, after the
three-year term of the 16th
session expired.
Of the 63 members on the
new committee, 33 are from
the CSRC and the others come
from government departments,
universities and financial
institutions.Bankers said the stricter
oversight during the first month
of the new session was probably
a harbinger of things to come.
“Based on their first-month
record, there is no doubt that
the regulators have ramped up
scrutiny on IPOs and this trend
is unlikely to be reversed any
time soon,” said a Beijing-based
banker.
The CSRC had alreadytightened its oversight of IPOs
since the beginning of the year,
after significantly accelerating
the pace of new listings in 2016,
when the rejection rate was
only 6.64%, according to Huajin
Securities.
Recent signs indicate that
regulators have further stepped
up efforts to weed out weak
candidates.
Last Wednesday, the CSRC
reviewed six listing applications
and rejected half.
On the same day, there were
media reports that at least two
former members of the issuance
examination committee had
come under the investigation of
judicial authorities. These former
examinators had reviewed
and approved the Rmb730m
(US$111m) ChiNext IPO of video
content company Leshi Internet
Information and Technology inChina reopens offshore bond flow
Bonds NDRC clears dozens of issuers for offshore offerings after slowdown in approvalsBY DANIEL STANTONChinese regulators have
reopened the pipeline for
mainland issuers to sell offshore
bonds after slowing approvals in
recent months.
The National Development
and Reform Commission, the
main regulator of Chinese
international bonds, has
approved as many as 40 offshore
issues since the National
Congress of the Communist
Party ended late last month,
according to bankers working on
some of the deals.
Chinese companies are
required to register with the
NDRC their offshore bond
issuance plans in advance, but
in practice the registration
system acts as an approval
process.
“We used to wait for the
market window but now we just
wait for NDRC approval,” said a
DCM syndicate head at a Chinese
bank.
The number of new approvals
is based on bankers’ estimates,
rather than official data,but people working on debt
financings say the pace and
scale of the registrations are well
above expectations.
One DCM head at a Chinese
bank said the new batch of
approvals were valid until
the end of March, and called
it a “surprise gift” from the
regulator.The move paves the way for a
new wave of overseas financings
from China, in what is already a
record year for G3 bond sales.
Chinese issuers have sold
US$120.1bn of G3 bonds so far
this year, up 67% on the same
period last year and well ahead
of the 2016 full-year record
of US$87.2bn, according toThomson Reuters data.
Some issuers with applications
already filed to the NDRC
have held non-deal roadshows
to update investors on their
companies, allowing them to
launch deals quickly if approvals
are granted.
The dearth of approvals in
recent weeks was seen as a wayNews
REJECTION OF A-SHARE IPOS
2017
2016 Jan to Sep Oct
Number of rejections 18 53 6
Number of reviews 271 395 25
Rejection rate 6.64% 13.00% 24.00%
Source: IFR, Huajin Securities