CSRC to ease domestic listings for unicorns

Rules for A-share IPOs should be ‘more flexible’

China’s securities watchdog will help “build the road” for domestic unicorns to get Ashare listings, an official from the China Securities Regulatory Commission (CSRC) said on Tuesday.

Jiang Yang, a member of the 13th National Committee of the Chinese People’s Political Consultative Conference and vice chairman of the CSRC, said that the regulator aims to encourage Chinese unicorns that lave listed overseas to return to the domestic A-share market, but whether or not the return will actually happen is down to the market, domestic news website zqrb.cn reported on Tuesday.

Unicorns are start-ups that have valuations of more than $1 billion.

Jiang’s comments came after media reports noted that the government has decided to cut short the listing approval time for unicorns in four sectors – biotechnology, cloud computing, artificial intelligence and high-end manufacturing. The government will also relax the IPO requirements for such companies’ profitability, the reports noted.

So far, the first batch of companies that can enjoy such preferential policies includes internet giants such as Alibaba Group, Tencent Holdings and Ctrip, according to a report by domestic news site caixin.com on Monday.

Alibaba told the Global Times on Tuesday that it has always wanted a domestic listing, if the conditions be suitable. Alibaba is listed on the New Yorkbased NASDAQ board.

Domestic tourism services provider Ctrip, which is also listed in the US, told the Global Times on Sunday that the company would consider all options presented to it.

Tencent Holdings did not respond to requests for comment as of press time.

Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, said that it’s understandable the government wants the return of internet giants like Alibaba, because there is not enough representation of the new economy in the A-share market.

“How can you highlight new-economy-themed stocks when the competent high-tech giants are all listed on overseas exchanges?” Dong asked.

Dong noted that the rigid requirements of the A-share market, such as excluding dual-class share structures, have caused many domestic firms to seek listings overseas instead.

“It’s important that reforms should be conducted to make the A-share system more flexible, such as introducing a multi-channel IPO standard,” Dong said.

But he predicted that not all high-tech firms will return to the domestic market, even with government encouragement.

“Spinoffs or separate listings are more likely,” he said.