China to let big tech firms jump IPO queue

The mascot of Ant Financial, one of the firms said to be considered for the IPO shortcut.
The mascot of Ant Financial, one of the firms said to be considered for the IPO shortcut.PHOTO: REUTERS

HONG KONG • China's securities regulator is considering offering a shortcut for some of the country's largest technology companies to list their shares, allowing them to jump a long queue of applicants and boost domestic bourses, according to six people with knowledge of the proposals.

The sources said companies being considered for the shortcut could include Alibaba Group's Ant Financial affiliate, the world's most valuable financial technology company; Zhong An Online Property and Casualty Insurance, and security software maker Qihoo 360 Technology.

Ant Financial, valued at US$60 billion (S$84.3 billion) at its most recent funding round last year, is expected to be one of this year's largest initial public offerings (IPOs). While Ant Financial has not specified a preferred listing venue, analysts and bankers have said the deal will likely take place in Hong Kong, given the queue in China.

China has been losing out to the New York Stock Exchange and Nasdaq on key technology listings, so more IPOs at home could mean millions of yuan in revenue for Chinese investment banks, which dominate domestic stock issuance.

There are about 700 companies waiting for the green light from the China Securities Regulatory Commission (CSRC) to go public in Shanghai or Shenzhen.

Though the regulator has increased the pace of approvals in recent months, that still leaves a typical 18-month wait or longer before companies are able to raise funds, making the domestic market unattractive to fast-growing technology companies in need of funds to fuel their expansion.

Last September, the CSRC tweaked the rules to let companies in some impoverished Chinese regions skip the queue. In January, companies in the Xinjiang Uyghur Autonomous Region were among the beneficiaries.

Over recent years, the United States has been a popular destination for listings by Chinese Internet start-ups and software makers.More recently, some Chinese companies have opted to relist back home, where valuations are several times higher than in international markets.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 25, 2017, with the headline 'China to let big tech firms jump IPO queue'. Print Edition | Subscribe