China limits fintech IPOs
►Shanghai board to push for cutthroat innovation
China’s securities regulator Friday unveiled revised guidelines on qualifications for listings on the NASDAQ-style sci-tech board in Shanghai, which set limits on fintech IPOs and bar financial investment firms from seeking a listing in the market.
The revision is a much-needed effort to align the Shanghai market with China’s push for breakthroughs in especially cutthroat technologies, market watchers said.
The updated guidelines might sink hopes for Ant Group to rekindle its pulled IPO under its current organizational structure, they said, envisioning the possibility of the would-be financial holding firm to mull ways to list its most sci-tech part in the market.
The revised system of indicators for evaluating the sci-tech attributes of firms filing for an IPO in the STAR Market in Shanghai creates a clear-cut yet feasible negative list, and imposes strict limits on industries eligible for Star Market listings, Li Weiyou, deputy director of the Department of Public Offering Supervision at the China Securities Regulatory Commission (CSRC), said at a press conference on Friday.
Companies falling under fintech innovation will have their IPO plans combed through and their listings in the Shanghai market will be restricted, according to Li.
Real estate firms and those principally engaging in financial investment will be banned from floating on the Shanghai market.
The revision suggests Ant’s suspended IPO may never be rekindled, judging by its existing business lineup, said Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies of Renmin University of China.
The Alibaba fintech offshoot’s dual IPO in Shanghai’s STAR Market and Hong Kong were suspended in early November ahead of their planned debut. Ant will apply to transform itself into a financial holding company as part of a multifaceted rectification plan.
The revised guidelines were introduced on the back of lessons from Ant’s IPO suspension, said Dong, citing data revealed by Ant in its initial prospectus that its sales revenues and profits vastly come from its credit business.
Lauding the revision as a muchneeded attempt to truly let the most innovative tech firms float on the sci-tech board, he called for efforts to streamline IPOs for firms scrambling for breakthroughs in cutthroat technologies.
Prior to its rectification, Ant wasn’t in accordance with the Shanghai market’s push for sci-tech firms from the aforementioned six industries to seek IPOs, said Wu Jinduo, head of fixed income at the research institute of Great Wall Securities.
If Ant’s research and development spending on its payment service hits the STAR Market threshold, the company might take a detour to reconfigure its IPO plans, Wu said, speaking of the possibility of an IPO revival in case of future organizational changes.