China’s overseas-listed tech giants in top talks for trading homecoming

Executives eye synergies from issuance in their biggest market

PUBLISHED : Sunday, 04 March, 2018, 10:00am
UPDATED : Sunday, 04 March, 2018, 1:54pm

China’s securities watchdog is in talks with the country’s tech giants to pave a way for innovative companies listed overseas to be traded at home via finance certificates.

On the sidelines of an annual gathering of the country’s top advisory body on Saturday, several businesspeople confirmed discussions were under way to enable tech companies to bypass the profitmaking requirement for main board listing and keep their corporate structures intact, as part of China’s push to make its capital market more supportive of innovation.

“Sogou, along with a couple of other internet companies, is expected to make a breakthrough [to start the process] this year,” Sogou chief executive Wang Xiaochuan said in Beijing on the first day of the Chinese People’s Political Consultative Conference.

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Wang, a CPPCC delegate, said his company was among those that had been in talks with the China Securities Regulatory Commission for such a listing.

“For internet companies, most of our market and users are in China … To get listed at home would form a bigger synergy,” Wang said.

Sogou, the operator of the country’s second-biggest search engine and most popular digital input method for Chinese characters, raised US$585 million in its New York initial public offering in November.

Ding Lei, another CPPCC member and chairman of NetEase, China’s second-largest gaming operator, said regulators had also consulted his company about using Chinese depositary receipts (CDRs) to open a way for shares in US-listed tech firms to be traded in China.

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“We will definitely consider [the new plan] ... We have our products and consumers here in China and they know us better,” Ding said, adding that a mainland China board would be more attractive to NetEase that one in Hong Kong.

CDRs are essentially certificates issued by a Chinese bank representing a specified number of shares in an overseas stock and can be traded on a mainland exchange.

Ding said details for such an issuance were still being discussed.

Earlier this year, sources close to the CSRC said trading in US-listed Chinese tech firms could start on the Shanghai and Shenzhen stock exchanges as soon as this year.

Chinese financial media site Caixin reported on Saturday that eight tech firms, including Baidu, Tencent, JD.com, Alibaba and Xiaomi, would be in the first batch to list on the mainland via CDRs.

Alibaba owns the South China Morning Post.

Baidu chief Robin Li said on Saturday that the company would list shares in China “as soon as” it was allowed.

“It has always been our hope to list as a whole on the mainland, because our primary users and primary market are all in China. It would be ideal if our primary shareholders could be too,” Li said.