(Yicai Global) Nov. 29 -- Major players from China's brokerage sector have started to select companies for possible for listings on Shanghai's upcoming tech innovation board.
Industry mainstays such as CITIC Securities, Huatai Securities and China International Capital expect the first batch of listings to take place in the first quarter of next year and anticipate that rules will come out before the end of this year, Yicai Global learned from industry insiders.
Shanghai aims to attract new economy players to list on the high-tech stock trading board through the city's stock exchange, which will feature less stringent listing requirements compared with traditional floats.
Industry Heavyweights Take Action
Employees at a brokerage in eastern China are already anxious to get to work on drawing up targets for the launch, a company insider told Yicai Global.
"We have to find candidates from customers that have worked with before since time is limited," a senior vice president from a brokerage's investment banking department said. "Regulators have high expectations and requirements for the first batch of listing companies since they are part of the test-run for the new board."
Twenty to thirty companies are estimated to be among the first batch of enterprises. Investors of potential candidate companies will invite brokers to carry out due diligence on targets, an insider said.
Brokers are still unable to sign official contracts with these candidate firms as the new board's rules are yet to be rubber-stamped and instead they look to build up mutual trust with potential partners.
Large brokers need to seize the market first, according to the insider from the eastern Chinese brokerage, adding that partners for the first batch will mostly comprise top investment banks.
Small and Medium-Sized Brokers Wait to See
Most small and medium-sized brokerages West China are yet to take action on projects related to the new board, its investment banker told Yicai Global.
An initial public offering project takes about two years to nurture, and some companies originally preparing for listing on the main or secondary boards are also eligible for the new board too. The key is whether investment banks have the right projects, the banker explained.
A key driver of the positive actions of leading brokers toward the board is the pressure to seize a leading position in the market. Smaller players prefer traditional business because concrete details of the new board remain spare, he added.