Biodiesel firm delays its Hong Kong share sale while Beijing's new regulations on red chips are unclear
Gushan Environmental Energy, a biodiesel fuel producer, will delay its Hong Kong initial public offering until at least the first half of next year to await clarification of new mainland rules that bring red-chip listings under much closer regulatory scrutiny.
The firm is the first red-chip listing candidate to announce a delay since the rules took effect on Friday.
Some investors believe that uncertainty over the intent of the new rules will dry up the red-chip listing channel for the rest of the year, while others say the rules signal Beijing's desire to end red-chip share offerings altogether and make H-share listings the only way of accessing the Hong Kong market.
Gushan Environmental received listing approval from the Hong Kong stock exchange for its up to US$200 million offering late last month and had expected to begin trading later this month.
However, the company and its sponsor, Credit Suisse, chose to delay the share offering because of the new regulations, which are already having an impact even though investors are eagerly waiting for Beijing to clarify the intent of the rules.