IPO Activity - Resurgence of Chinese Companies Listing with US Public Markets
When China Internet Nationwide Financial Services debuted in August, there was at the time only about a half dozen Chinese firms that had gone public in the U.S in 2017, according to data from NASDAQ and the New York Stock Exchange. But in the months that followed, that number surged. By December, more than 20 Chinese companies had listed.
This Boustead Securities IPO News has been reposted from CGTN.
It’s the largest number of Chinese listings in the U.S. since 2010, when a record 39 Chinese companies went public, according to IPO auditor Marcum Bernstein & Pinchuk.
NASDAQ and the New York Stock Exchange are the two largest stock exchanges in the world, and a listing on either of them gives companies access to the deepest pool of capital. But since the record number of Chinese IPOs seven years ago, Chinese listings plummeted following a series of accounting scandals, suspensions and de-listings that kept U.S. investors wary, and Chinese companies at bay. But that’s changing.
Part of it is due to improved accounting and transparency, as well as more attractive valuations in the U.S. But there’s another key difference, says Dan McClory of Boustead Securities, which underwrote three of the Chinese IPOs this year.
“So now the resurgence is related to Chinese companies coming to market in the U.S. with Chinese investors. So these companies aren’t just coming to the U.S. and thinking they’re going to have capital thrown at them. They’re coming with their checkbook already full from investors from China who are closer to the company, who know and understand it better, and who are in a lot of cases better long-term fits,” McClory said.
Drew Bernstein concurs. He is co-managing partner at Marcum Bernstein & Pinchuk, which audited five of the Chinese listings this year.
“And also a lot of the more recent IPOs, they’ve had this little nuance to them in the sense that they’ve had some of these really stellar companies or brand-name companies participating as shareholders. So you’ve had Tencent, Alibaba, Baidu all participating as shareholders in some of these recent IPOs, which I think adds some credibility to them from the investors side,” said Drew Bernstein, Marcum Bernstein & Pinchuk Co-Regional Managing Partner.
This makes it a win-win situation for the Chinese companies, as well as their investors on both sides of the Pacific. Market observers expect the trend to continue well into 2018.