A new dawn

The door to overseas IPOs is reopening for Chinese companies.

On Wednesday, the securities regulator (CSRC) said Majestic Ideal Holdings – a small supply chain management provider – had completed the required registration process for an overseas listing.

• This marks the first US IPO to go through the review process since new CSRC regulations for overseas share sales were implemented in March.

Quick recap: Offshore listings ground to a near-halt following Didi’s IPO fiasco in mid-2021 and the audit standoff between Chinese and US authorities.

• Only 10 Chinese companies listed in the US last year (Bloomberg).

• Under the new listing rules, IPO hopefuls must submit documents to the CSRC for review showing they've complied with national security and personal data protection regulations.
• The IPO can proceed once the CSRC's notified them it's completed the review.

More listings are coming down the pike. Per the CSRC:

• 96 companies have submitted offshore IPO plans since the new regime started – 24 for the US and 72 for Hong Kong.
• So far, 10 have cleared the review process – all notified in July – with only Majestic Ideal choosing the US.

Get smart: China's intention was never to stop overseas IPOs, but to clear up the chaotic regulatory system exposed by Didi's ill-fated listing.

• With companies, advisors and regulators finding their feet in the new regime, the IPO tap is now coming back on.

• But in this climate, the sexiest companies in the hottest sectors are likely to eschew the US for the safer shores of Hong Kong.