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Chinese cos rush for US listings ahead of new rules

Agencies . Shanghai/Singapore
01 Apr 2023 00:00:00 | Update: 31 Mar 2023 22:44:41
Chinese cos rush for US listings ahead of new rules

The number of US IPOs by Chinese firms jumped in March, as some of them rushed to set up offshore listings before rules take effect that will complicate the process, though with markets jittery, several met with a tepid response.

Seven Chinese firms including Chanson International (CHSN.O) and Hongli Group (HLP.O) have launched public offerings in March to raise a combined $82.3 million, compared with just four in the preceding two months.

Although the numbers are not huge, the surge stands out since only six mainland China-based companies launched US IPOs in 2022 as Sino-US tensions and in particular strict regulatory scrutiny on both sides hurt investor demand for such listings, reported Reuters.

China’s new rules, published in February and which take effect on March 31, are aimed at reviving the path for international offerings, which all but disappeared in the wake of regulatory crackdowns beginning in the middle of 2021.

They also impose an approval system on a once freewheeling market, with a focus on national and data security, hence the hurry from some firms to get in ahead of them.

“There is obvious acceleration in Chinese companies seeking U.S. offerings this month, considering the uncertainty posed by the new offshore listing rules,” said Stephanie Hu, head of Asia, investment banking at EF Hutton, which was a bookrunner on Chanson’s listing.

The new system requires submitting materials to the China Securities Regulatory Commission (CSRC) and getting the green light from relevant government bodies.