China firms scramble to sell shares
Some companies have waited a year, some are new, but they are all in the hunt for cash and a listing
Beijing's decision to lift its year-old ban on initial public offerings has set off a scramble among companies eager to tap the mainland's resurgent stock markets.
So far, more than 100 have applied to raise money through IPOs on the Shenzhen and Shanghai exchanges, with 60 more already-listed companies seeking permission to raise fresh capital through secondary offerings.
About 30 companies that had received approval to sell shares before last year's suspension are jostling to go to the head of the line.
What is especially striking is the prominence of privately owned firms on the list. In the past, newly created manufacturing companies carved out of old-line, state-owned enterprises dominated the market.
Many had shaky finances, lacklustre management and uncertain prospects - but good political connections - and their relative unattractiveness to investors had much to do with the market's lengthy swoon.
That is changing.
'The most important consideration is the quality of the companies,' one regulatory source said.
Wary mainland investors have signalled their willingness to give the markets a second chance.
With the Shenzhen Composite Index up 51.19 per cent so far this year and its Shanghai counterpart registering a 43.45 per cent gain, the mainland markets have suddenly gone from among the worst performers last year to ranking third and fifth among major world exchanges this year.
The securities regulator has given approval to one long-pending offering, by Shenzhen-based Coship Electronics, a producer of television equipment and LED displays, to become second in line behind China CAMC Engineering. It planned to sell shares on the Shenzhen small and medium-enterprise board, sources said.
Coship won approval in principle for its float in September 2004 but had to delay after the China Securities Regulatory Commission banned new share sales at the beginning of last year.
'We were told last month that we would be among the first to list and we are now waiting for the regulator to finalise the date so we can begin our roadshow,' said Yan Jiahao, Coship's director of market operations. 'We didn't know we would be second.'
The company plans to sell about 60 million shares but has not yet set a price range.
CAMC is due to start selling shares on Monday and Coship is set to follow in the middle of next month. Immediately after this, the far larger Shanghai exchange will see its first offering. This could be Bank of China, which sources say will be listed 'as soon as possible', although a final decision on which outfit goes first has not been made.
The CSRC issued a notice saying it would hold a meeting on Friday to approve the first new IPO and secondary offering. Guangdong Dymatic Chemicals is expected to be the first to win formal approval in more than a year and Shenzhen-listed travel firm Shenzhen OCT will receive refinancing approval.
However, Guangdong Dymatic will probably have to wait for at least some of the 30 or so companies with prior approval to list.
Officials say all IPOs will follow previous practice, with companies listing about 33 per cent of their shares. The remainder will be locked up for three years to allow the ongoing state-owned share reform process to be completed.
