All M&A, Restructuring Applications by Chinese A-Share Listed Companies Get Go-Ahead for Second Straight Month

All M&A, Restructuring Applications by Chinese A-Share Listed Companies Get Go-Ahead for Second Straight Month

Dou Shicong

Date: Wed, 12/06/2017 - 21:03 / source:Yicai
All M&A, Restructuring Applications by Chinese A-Share Listed Companies Get Go-Ahead for Second Straight Month
All M&A, Restructuring Applications by Chinese A-Share Listed Companies Get Go-Ahead for Second Straight Month

(Yicai Global) Dec. 6 -- The approval rate of China's A-share initial public offering (IPO) applications has kept declining as regulators tighten scrutiny. However, China’s securities regulator has approved all the applications for mergers and acquisitions (M&A) and restructuring submitted by listed companies in the past two months, raising investment banks’ expectations for back-door listings by companies.

In October and November, the China Securities Regulatory Commission reviewed 20 M&A and restructuring proposals by listed companies, approving all of them, with 12 receiving unconditional approvals and eight getting conditional approvals, Shanghai Securities News reported today. However, the average approval rate of M&A and restructuring applications was 90 percent in the first nine months of this year, with the rate reaching 100 percent only in April.

Higher approval rate does not mean regulators have relaxed requirements when reviewing M&A and restructuring applications, insiders said, adding it was because heightened scrutiny led to a decrease in the number of such applications and investment banks were also better prepared. Some 27 M&A and restructuring applications were approved in June, and 23 such applications got greenlight in July. The number of applications approved has declined substantially in the past two months. It remains to be seen whether the 100 percent approval rate will sustain.

Nonetheless, given that IPO approval rate was only 50 percent and 66.7 percent, respectively, in the past two months, investment banks are having higher expectations for back-door listings by companies. An investment banker said he was very much looking forward to the final review result of internet security leader Qihoo 360 Technology Co.’s back-door listing via SJEC Corp. [SHA:601313], a benchmark project.

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Keywords: MERGERS, IPO, Backdoor Listing, 360, SJEC Corporation