SHANGHAI/HONG KONG (Reuters) – China’s ambitions for a Nasdaq-style board for start-ups have galvanized the country’s tech companies who are hopeful they can sidestep complex IPO hurdles and access easier funding.
FILE PHOTO: Investors look at computer screens showing stock information at a brokerage house in Shanghai, China September 7, 2018. REUTERS/Aly Song/File Photo
The surprise announcement for Shanghai’s planned “technology innovation board” by President Xi Jinping in early November paves the way for a lower listing threshold, potentially scrapping a requirement that aspiring companies must be profitable.
For Beijing, the move is seen helping to counter U.S. curbs on its technology companies and may draw the next generation of high-tech firms to list at home. Some of China’s best known brands such as e-commerce firm Alibaba Group and gaming and social media giant Tencent Holdings have listed in New York and Hong Kong.
Last year, Chinese companies raised $64.2 billion globally – almost a third of the worldwide total – via initial public offerings (IPOs), but just $19.7 billion of that came from listings in Shanghai or Shenzhen, according to data from Refinitiv, compared with $35 billion in Hong Kong.
The intense interest in the new board, even before rules are finalised, underscores the significance to private Chinese companies of having an alternative source of funding.
“Our business is in the field of network information security and coding technology, and we’re regulated by the (Communist) Party. So we cannot receive foreign capital or list overseas,” said Tan Jianfeng, Chairman of PeopleNet.
“The new board is a very good (funding) opportunity for companies like us, and we have plans to list there.”
According to the Hurun Report, China had 181 unicorns at the end of September, surpassing the United States as the country with the