Nasdaq plans to tighten listing rules, making it harder for Chinese companies to raise funds through initial public offerings
- The new rules will require companies from some countries, including China, to raise US$25 million in their IPO or, alternatively, at least a quarter of their post-listing market capitalisation
- Out of 155 Chinese companies that listed on Nasdaq since 2000, 40 grossed IPO proceeds below US$25 million, according to Refinitiv data
While Nasdaq will not cite Chinese companies specifically in the changes, the move is being driven largely by concerns about some of the Chinese IPO hopefuls’ lack of accounting transparency and close ties to powerful insiders, the sources said.
Nasdaq also unveiled some restrictions on listings last year, seeking to curb IPOs by small Chinese companies. Their shares often trade thinly because most stay in the hands of a few insiders. Their low liquidity makes them unattractive to many large institutional investors, to whom Nasdaq is seeking to cater to.
The new rules will require companies from some countries, including China, to raise US$25 million in their IPO or, alternatively, at least a quarter of their post-listing market capitalisation, the sources said.
This is the first time Nasdaq has put a minimum value on the size of IPOs. The change would have prevented several Chinese companies currently listed on the Nasdaq from going public. Out of 155 Chinese companies that listed on Nasdaq since 2000, 40 grossed IPO proceeds below US$25 million, according to Refinitiv data.