China to close loophole used by tech firms for IPOs
MAINLAND CHINA & HONG KONG
China is planning to ban companies from going public on foreign stock markets through variable interest entities (VIE), according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors.
The ban, intended in part to address concerns over data security, is among changes included in a new draft of China’s overseas listing rules that may be finalised as soon as this month, said the people, asking not to be identified discussing private information. Companies using the so-called VIE structure would still be allowed to pursue initial public offerings (IPOs) in Hong Kong, subject to regulatory approval, the people said.
Companies currently listed in the US and Hong Kong that use VIEs would need to make adjustments, so their ownership structures are more transparent in regulatory reviews, especially in sectors off limits for foreign investment, the people said. It is unclear if that would mean a revamp of shareholders or, more drastically, a delisting of the most sensitive firms – moves that could revive fears of a decoupling between China and the US in areas like technology. Details of the proposed rules are still being discussed and could change.
The overhaul would represent one of Beijing’s biggest steps to crack down on overseas listings following the New York IPO of ride hailing giant Didi Global Inc, which proceeded despite regulatory concerns. Authorities have since moved swiftly to halt the flood of firms seeking to go public in the US, shuttering a path that has generated billions of dollars for technology firms and their Wall Street backers. – Bloomberg News.
The Shanghai Composite Index upped 0.36% to 3,576.89 on Wednesday while the Hang Seng Index climbed 0.78% to 23,658.92.
REST OF ASIA
Investors voted to approve the merger of ride hailing provider Grab Holdings Inc and Altimeter Growth Corporation (AGCUU US), completing one of the largest special purpose acquisition company (SPAC) deals ever after a year of tumult for SPACs and the transaction itself.
The proposal passed at a special shareholder meeting Tuesday (30 November), setting the stage for Grab to become a publicly traded company, according to a statement. Shareholder redemptions, or investors opting out of the deal, were effectively 0%, at 0.02%. The combined entity will start trading on the Nasdaq on 2 December under the ticker GRAB.
Altimeter Growth shares, originally sold at USD10.00 each, have had a tumultuous year. They closed at USD12.72 in US trading Tuesday, down 5.8% as market indexes fell. – Bloomberg News.
Australia’s S&P/ASX 200 Index fell 0.51% to 7,199.30 early-Thursday morning, adding to its loss of 0.28% to 7,235.90 on Wednesday.
South Korea’s Kospi Index upped 0.23% to 2,907.36 in early Thursday trading. It climbed 2.14% to 2,899.72 the previous session.
The Taiwan Stock Exchange Weighted Index rose 0.91% to 17,585.99.
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