BYD suspends US$414 million IPO plan of semiconductor unit amid investigation into law firm advising on the deal
- Shenzhen Stock Exchange suspended reviewing BYD Semiconductor’s IPO application on August 18
- BYD’s chip-making unit may need to replace the law firm which in turn has three months to complete the due diligence
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BYD Semiconductor will proceed with the due diligence as soon as possible, while the company was not yet sure if it would need to change the law firm as yet, a spokeswoman said.
Beijing Tian Yuan Law Firm did not respond to a request for comment.
As per the exchange’s rules, BYD Semiconductor and the other candidates can resume their applications when the investigation into the law firm is completed or if they change their law firms. The new advisers have three months to conduct due diligence and check the work of the previous lawyers for the applications to proceed further. If the reviews are satisfactory, the IPO candidates can resume their listing plans.
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The suspension of BYD Semiconductor’s spin-off plan did not have any impact on carmaker’s Hong Kong-listed shares. BYD closed 4.8 per cent higher on Monday. Its Shenzhen-listed shares added 1.6 per cent.
Analysts said the setback to BYD Semiconductor’s listing plan was likely to be temporary.
“The suspension of the spin off plan can be resolved by appointing a new lawyer,” said Kenny Ng Lai-yin, a strategist at Everbright Sun Hung Kai Securities. “Investors have confidence that the spin-off plan will go ahead eventually.”
Beijing Tian Yuan Law Firm was founded in 1992, one of the earliest partnership law firms in China and now has 150 partners and more than 600 practitioners, according to its website. The Beijing-headquartered law firm has 11 branches, including Shanghai, Shenzhen, Chengdu, Hangzhou and Hong Kong. It is active in offering advice in capital market services, such as IPOs, mergers and acquisitions and asset management.
Additional reporting by Daniel Ren in Shanghai