The A-share market is getting ready for its first batch of initial public offerings since the securities regulator issued new rules in November.
According to two domestic banking sources, the 83 companies that have passed the regulatory review and are waiting in line are required by China Securities Regulatory Commission to confirm by Friday, December 20, as to whether they will launch their IPOs in January.
The regulator has said previously that around 50 companies could list by the end of the month. However, the exact number of issuers that plan to tap the market will only be known after the issuers confirm today.
The purpose of the regulator’s request is not to control the listing process, but to get a better understanding of the IPO pipeline for January, said one source.
Some companies may not be able to launch deals so soon because of the need to prepare materials and update prospectuses in line with the new rules.
“Issuers may need to update quarterly financial numbers or seek approvals from shareholders,” said another source. “If they can’t complete all these and miss the window for next month, they may wait until March or even later to launch deals.”
However, deal sponsors are working hard to make the window and are keen to push ahead with deals as soon as possible.
“The first deals will benefit a lot as the market has been closed for 15 months,” said a banker at a mid-sized securities house. “We expect the share price of the first IPOs will go up, so issuers don’t want to wait.”
Zhejiang Zheneng Electric Power, the first company to transfer its B-shares to A-shares, got the deal done and listed 600 million new A-shares on Thursday. The shares surged 60.58% on their trading debut.
The deal, although not a traditional IPO given there are no new funds raised for the issuer, provides a reference to the new listings under new rules to come in January, according to the bankers.