It is expected that Chinese listings in the United States will be spruced up by the planned $4 billion New York debut of the Chinese ride-hailing giant Didi Chuxing.
Despite the political tensions between the US and China, the listings of Chinese companies on US exchanges was at an all-time high in the first half of the current year.
According to Refinitiv data, in the first six months of the current year, a total of $7.6 billion was raised by a total of 29 Chinese companies through initial public offerings (IPOs) in the United States which is the highest amount ever for the time period.
Last year in the same period, Chinese companies were more cautious about uncertainties resulting from the economic impact of the Covid-19 pandemic and consequently the combined value of US listings of Chinese firms was $1.9 billion less.
The surge in US listings of Chinese firms occurred despite the continuing political tension between the two countries with the new US President Joe Biden at the helm of affairs, and the impending threat of the US throwing out Chinese companies from US exchanges if they did not meet auditing standards.
“The Chinese equity story is still appealing to international investors, whereas the U.S. valuation and international fund raising opportunities are just as appealing to the Chinese issuers,” said Ivy Wong, chair of law firm Baker McKenzie’s Asia Pacific capital markets practice.
“Having contemplated the audit requirements coming into play for quite some time, it doesn’t seem that the investors’ appetite has changed nor the issuers’ appetite to list and raise funds from U.S. listings has changed,” Wong added.
Currently there are 10 companies that have made public filings for listing in the United States among which Didi is the largest which is aiming to raise $4 billion for a valuation of more than $60 billion.
Compared to the 29 listings so far this year of Chinese companies in the US, there were only 13 companies that had got listed in the same period a year ago.
The Holding Foreign Companies Accountable Act, which was signed into law by the then-US President Donald Trump in December last year, is being pushed on by the current Biden administration. This law was designed to remove Chinese companies from US exchanges if they were unable to meet the American auditing standards for three straight years.
Full Truck Alliance, sometimes referred to as “Uber for trucks”, was the biggest Chinese listing in the United States so far this year. The firms raised $1.6 billion earlier this week. The second largest Chinese listing was from e-cigarette company RLX Technology which raised $1.4 billion in January.
Didi is expected to be the biggest U.S. IPO this year.
(Adapted from TheEconomicTimes.com)