Regulators urged to have better understanding of tech firms to keep them listing in mainland
Hundreds of prospective start-ups have balked at the strict IPO profit requirements in China and sought listings overseas instead
Mainland regulators still need to better understand the nature, operating structures and earnings potential of technology start-ups, as firms accelerate their fundraising activities via new share issues, according to professional service company PwC.
Technology firms are subject to strict profit requirements if they chose to launch initial public offerings (IPOSs) on the A-share market. But Beijing is equally determined to liberalise the stock market to ease their expansions.
“The regulators are imposing higher requirements on supervising companies and assessing their qualities,” said Gao Jianbin, a PwC partner.
“Internet companies now have a colossal number of clients and the regulators have to understand how their business models work, and how they make or plan to make profits. It’s often a tough question for the regulators to answer.”
The China Securities Regulatory Commission (CSRC) has been fast-tracking IPO approvals this year, and is likely to give more than 300 listing applicants, most of which are small- and medium-sized companies, the green light to raise funds on the stock market.