After the impact of Didi, Wall Street Bank is eager to save China’s IPO channel

After Beijing’s new cybersecurity rules suspended the lucrative tech IPOs that had previously traveled to New York, global investment banks are racing to shift the Chinese group’s initial public offerings to Hong Kong.

Dealogic data shows that about 20 Chinese companies have publicly disclosed plans to raise $1.4 billion through stock sales in New York this year. But that was before Beijing regulators launched an investigation into Didi Chuxing, and just a few days after the Chinese ride-hailing group went public in New York for $4.4 billion.Investigation news sent to Didi shares Down 20% Judging from its IPO pricing.

The intervention of Chinese regulators triggered Further U.S. listing in doubt And it triggered a scramble for redirected transactions.Advising Chinese companies on IPOs has always been Profitable business Banks including Goldman Sachs and Morgan Stanley had fee income of US$460 million in the first half of the year.

“We are talking about this with everyone. All Chinese issuers planning an IPO in New York are considering whether they can switch to Hong Kong,” said a senior capital market banker in Hong Kong.

The banker said that Hong Kong’s strict listing rules, such as minimum profit requirements, meant that many companies would have difficulty selling shares in Hong Kong. “If you want to reach an agreement this year, the best case is to postpone it to 2022, the worst case is that you can’t do it.”

In the first half of the year, 34 Chinese companies $12.4 billion raised In the New York IPO, both indicators hit record highs. Even when tensions between the US and China worsen, they will help support Bank of America’s fee income. Stocks worth more than 2 trillion U.S. dollars have been traded in New York.

Bankers and lawyers said that Hong Kong seemed to offer a good choice because Beijing’s control of the financial center meant that it would be less affected. New rules for overseas listing This has already hit New York stock sales.

The data security issue caused by the Didi shock is the core of China’s crackdown.A few days after the ill-fated IPO, China’s State Internet Information Office (CAC) launched a Cybersecurity review Join the company.

Senior officials in Beijing subsequently called for the establishment of a new regulatory system to regulate overseas IPOs, and CAC proposed rules that prohibit companies with more than 1 million users from listing overseas without security review and official permission.

Two Wall Street bankers in Hong Kong said that companies with a large amount of data in their business are one of the fastest companies to transfer their listing plans to Hong Kong and bear related delays and costs. “If you don’t have a data perspective, they will wait until things calm down. The problem is that no one wants to be the first,” said a banker.

Compared with Hong Kong, listed Chinese technology groups have long been optimistic about New York, because New York’s market is deeper, more liquid, and easier to go public, while Hong Kong companies are subject to scrutiny by the Hong Kong securities regulators and stock exchanges. Bankers can also enjoy a higher fee of 5% to 7% on the funds raised by selling US stocks, while in Hong Kong, the ratio is about 2%.

Bruce Pang, head of research at investment bank Huaxing Capital, said that China’s listing in New York will be affected before the details of the regulatory system are finalized among about a dozen Chinese regulators-after that, it may take several months for companies wishing to list overseas. The time was approved.

The histogram of investment bank revenue (in millions of dollars) from China’s New York IPO in the first half of the year shows that China’s IPO has brought record fees to Wall Street Bank

Pang added that more and more Chinese companies are facing the urgent need to go public. “If they can’t wait, Hong Kong will be their only choice,” he said.

The biggest beneficiary of this rule is the Hong Kong Exchanges and Clearing, whose shares have risen 14% this month.

The Hong Kong Stock Exchange appoints the first non-Chinese chief executive officer this year Nicholas Aguzin, A former JPMorgan Chase banker, was born in Argentina.

Aguzin’s mission is to maintain the Hong Kong Stock Exchange’s attractiveness to mainland Chinese issuers that hold more than 80% of its equity, while enhancing its image to foreign issuers, who are involved in a series of luxury products including Prada and Samsonite. The product has basically disappeared ten years ago after it went on the market.

However, a senior executive of the Hong Kong Stock Exchange said that although the exchange may benefit from a diversionary IPO in the short term, “the direction of progress does not look good.”

The executive said: “Currently, pressure is being put on issuers, but the next logical step is to put pressure on investors.” “I predict that the government and regulators will make it more difficult for capital to flow.”

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