(Yicai Global) Jan. 21 -- The ongoing partial shutdown of the US government has impacted reviews of initial public offering applications in the country and could set back the listing plans of Chinese firms.
The Stateside applications of at least 20 Chinese businesses are affected so far. The Chinese New Year holiday plans for staff at one of them could be in jeopardy as they await further news from the US, an insider at the company told Yicai Global.
The firm must complete its IPO before summer, the insider said, adding that a delay would increase costs, affect credit improvements and disrupt working plans for the year. Some of its employees are even preparing to spend the Spring Festival in the US in preparation for any new developments, he added.
IPOs planned for spring may have to wait until fall if the shutdown continues, analysts said. Half of the affected companies are in finance such as Samoyed Internet Financial Services and Futu Securities International. Gewang Biotechnology, Huafu Educational Consulting and Taixuan Network Technology are also among those impacted.
More than 400,000 federal workers are on leave without pay as Democrats and Republicans face off over President Trump's request for budget funds to build a wall on the border with Mexico. The US Securities and Exchange Commission ceased work on Dec. 27 with only 285 staff out of a total 4,400 on call to handle emergencies involving market integrity and investor protection. IPO applications remain off the table.
The House of Representatives voted on a democratic funding bill on Jan. 16 aimed at reopening the federal government until the end of the month. However, it failed to pass as it did not receive the two-thirds support required.
The insider's company had expected to ring the IPO bell in the second half of this month, but the SEC confirmed that its service would be unavailable for the foreseeable future. Roadshows and any share offerings are impossible without the SEC's go-ahead, he said, adding that everyone is on standby for now.
The process for Chinese companies going public in the US is transparent and clear. A special SEC team made up of lawyers, accountants, analysts and industry professionals review a company's registration statement in accordance with regulations. They confirm whether it meets the authority's requirements and thoroughly examine and verify all information.
The registration statement automatically comes into effect 20 days after the submission based on relevant rules. Terms for automatically extending the period also exist. Applicants will generally receive the first opinion letter from the SEC within four to six weeks of the first submission.
Editor: William Clegg