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Anonymous ID: 753db6 Aug. 10, 2020, 1:43 p.m. No.10244958   🗄️.is 🔗kun   >>5158 >>5270

Chinese companies rush for U.S. IPOs ahead of new restrictions

 

Chinese companies are rushing forward with plans to raise more than $5 billion in initial public offerings in New York ahead of new U.S. rules that would effectively shut off this funding channel.

 

KE Holdings, an online property platform backed by Tencent Holdings and SoftBank Group, and Xpeng, an electric carmaker with ties to Alibaba Group Holding, each filed new public prospectuses on Friday, a day after a White House task force recommended that all future Chinese IPO candidates be required to allow U.S. regulators to review their audit records as a condition of listing. KE Holdings, also known as Beike Zhaofang, could raise as much as $2.01 billion if its shares price at the top of the range indicated in the new prospectus. This would make it the largest U.S. IPO by a Chinese company in two years, according to data provider Dealogic.

 

Xpeng, which indicated a placeholder deal size of at least $100 million in its prospectus, is expected to seek around $500 million, according to U.S. investment bank Renaissance Capital. Other Chinese companies in advanced preparations for U.S. IPOs include Lufax, an online wealth management platform backed by Ping An Insurance Group, and ChinData, a data center operator with funding from Bain Capital. Lufax could raise at least $2 billion while ChinData is targeting around $500 million, according to people familiar their plans.

 

Both Xpeng and KE Holdings had originally filed their IPO plans confidentially. Other Chinese companies are likely to have made confidential listing applications which could become public in the coming days. Li Auto, a rival of Xpeng backed by ByteDance and internet company Meituan Dianping, raised $1.1 billion on July 30 in the biggest Chinese IPO so far this year in New York. It priced its shares at $11.50 each, well above the initial guidance of $8-$10, due to strong investor demand.

 

The U.S. Securities and Exchange Commission, whose chairman is part of the Presidential Working Group on Financial Markets, is expected to soon publish new rules putting into force the tightened requirements for new Chinese IPOs. Chinese companies already listed in the U.S. would have until Jan. 1, 2022 to come into compliance with the audit records disclosure requirement, which conflicts with Chinese secrecy laws. Failure to comply would lead to delisting.

 

Xpeng, which recently closed a $900 million funding round that included Alibaba, the Qatar Investment Authority and Abu Dhabi's Mubadala, said in its prospectus that the effort to tighten listing rules could "adversely affect" its share price or "result in prohibitions" on trading of the shares on the New York Stock Exchange.

 

KE Holdings similarly warned prospective investors that "we could face possible delisting from the NYSE (or) deregistration from the SEC."

 

U.S. President Donald Trump directed the White House task force to review the risks posed to American investors by Chinese stocks on June 4 as he sought to raise pressure on Beijing amid the coronavirus pandemic and its moves to tighten controls in Hong Kong.

 

His order also followed a series of accounting scandals at Chinese companies, most significantly, one this year involving Luckin Coffee, which lost most of its market value and its place on the Nasdaq Stock Market after disclosing that $300 million in recorded sales were fictitious.

 

With the presidential review underway, Chinese companies raised around $2 billion in U.S. IPOs between mid-June and the beginning of August, matching their haul over the first 5-1/2 months of the year and raising the accumulated sum past the full-year total for 2019, according to Dealogic data.

https://asia.nikkei.com/Business/Markets/Chinese-companies-rush-for-US-IPOs-ahead-of-new-restrictions