Remember those Chinese tech companies that went private in NY hoping to relist in the mainland? Yeah, things didn’t turn out quite as they planned.
As the WSJ reports, China’s current ban on IPOs has been a massive monkey wrench to their plans, and with previous IPO suspensions lasting between four to 13 months, they can only speculate how long it would last.
And that’s not the only thing killing their groove, as Su Jie, senior researcher at Bank of China Hong Kong told the WSJ:
“It’s hard to be optimistic about these Chinese companies’ journey home, given the deterioration of the Chinese market, the relatively consuming process of delisting and relisting, as well as the regulatory and compliance uncertainties.”
The delisting and relisting process could reportedly take up to two years, while stringent requirements – such as the fact that A-shares companies need to be profitable for three consecutive years before they could list – continue to add to their frustrations.
These tech firms originally went private hoping to relist in the mainland to exploit its higher valuations. Their timing was pretty good at first, as valuations in Hong Kong and the mainland continued to skyrocket, though the market rout took care of that as well.
Some of them are still hopeful though:
“The deal making continued during Monday’s selloff. China’s Xueda Education Group agreed to be purchased by a company controlled by state-owned technology investment firm Tsinghua Unigroup. Xueda Education will delist from the New York Stock Exchange and plans to become listed in Shenzhen by the end of the year.”
Photo: David Almeida