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Monday, 23 October 2017

China sees first batch of IPOs for market reopening

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After a year-long hiatus in mainland listings, five companies are set to complete their A-share IPOs in the first half of January, reopening the door for 755 other candidates waiting in the wings.

The five in the first batch of listings are Truking Technology, Zhejiang Wolwo Pharma, Guangdong Qtong Education, Guangdong Xinbao Electrical Appliances and Neway Valve.

All five have received final listing approvals from the China Securities Regulatory Commission. With the exception of Neway Valve, which is targeting a Shanghai listing, the four others intend to list on the Shenzhen Stock Exchange.

The five companies will start pre-marketing their floats later this week and begin building books late next week.

As expected, China preferred to test its new rules and mechanism with small listings instead of giant IPOs. The fundraising sizes of the five planned IPOs range from just Rmb119m (US$19.6m) to Rmb839m.

The five companies doing the IPOs are taking advantage of the new rules. For instance, all floats will comprise old and new shares. Shareholders of IPO candidates were not allowed to sell shares at the time of listing in the past. To fulfill the new requirements, controlling shareholders of the five listing hopefuls have also stated clearly in the prospectuses measures they would take to stabilise share prices of the companies in the three years after listing, if the shares trade below their net asset values.

CSRC unveiled the long-awaited IPO reforms at the end of November. The regulator had said at that time it expected about 50 IPO candidates, which had already passed listing hearings to receive final approvals come January, if they met all of the new requirements introduced under the reforms.

It will take about a year to clear the companies lining up for listing approvals, according to the regulator.

China Securities is managing the Rmb839m float of Neway Valve, while Minsheng Securities is arranging the Rmb119m IPO of Qtone Education. The sponsor of the Rmb249m offering of Truking Technology is Hong Yuan Securities, and that of the Rmb189m float of Wolwo Pharma is Daiwa SSC Securities. Dongguan Securities is the lead for the Rmb742m IPO of Xinbao Electrical Appliances.

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