China scraps valuation limit to kick-start Xi Jinping’s technology board for home-grown companies to raise capital

Shanghai’s stock exchange, tasked by Chinese president Xi Jinping last November to create a technology board for the country’s most valuable start-ups to raise capital, has fine tuned its listing rules and upped the ante with Hong Kong in the race for the title of Asia’s fundraising hub.

Initial public offerings ((IPOs) on the tech board will be priced through “interactions with eligible offline investors,” the exchange said late on Friday. That essentially removes the implicit valuation limit – currently capped at 23 times projected earnings – that binds most listings on China’s exchanges, according to two Shanghai bourse officials familiar with the rules.

That would be attractive to so-called unicorns, or companies valued at more than US$1 billion, most of whom are non-state enterprises funded by angel investors, venture capital or private equity.

The amended rules would kick-start the Chinese government’s tech board and provide a fundraising avenue for the most valuable companies, at a time when private businesses struggle to obtain loans from state banks that are leery of taking risks on start-ups or uncollateralised enterprises.