• Ernie Diaz

He Said, Xi Said

Way back in April we reported on the 88 Chinese tech companies suspending their IPOs, further to increased regulations. One may have inferred that regulators had it in for all things China IPO, at least to hear the miffed pre-IPO investors and brokers calling our office.

A look at the numbers tells a different tale. 196 Chinese companies have completed IPOs in the first 5 months of 2021, a 111% YoY increase, among them tech companies aplenty. Was the Ant Financial crackdown not an air siren warning all to take cover?

"The revised securities law ruling in March had just as big an effect on companies' decision to suspend their IPOs as the Ant Financial incident," says Jimmie Jeremejev. "A key feature of that new law is more transparent disclosure on the ownership structures of companies applying for IPOs. That isn't to say that the cap tables of the suspended IPO companies are falsified or noncompliant, but rather that they're....complicated. Not everyone with a large stake in a pre-IPO company wants their holdings known, for a range of reasons."

"Still, the new law is an important step in protecting the retail investor, and the temporary effect of some suspended IPOs seems to be negligible, what with total IPOs actually increasing."

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