BEIJING — Switzerland has become the go-to place for Chinese companies seeking to raise cash internationally
That’s according to Baker McKenzie, which said it advised the first four Chinese companies to list via the Stock Connect program with Switzerland on July 28. The companies raised approximately $1.5 billion.
Mr. Wang Hang said that the China securities regulator approved the new share issuance in just a few weeks. He mentioned that share issuances like this could take a few months or even a half a year. The China Securities Regulatory Commission did not immediately respond to a request for comment from CNBC.
It is not an IPO, but rather a new avenue for Chinese companies listed on mainland China’s A share market to raise capital overseas.
Four companies – GEM, Gotion High-tech, Keda Industrial Group, and Ningbo Shanshan – issued GDRs in a new China-Swiss stock connect program on the Six Swiss Exchange. These four companies operate in the emerging energy and manufacturing industries.
In the summer of 2021, Beijing’s crackdown on Didi and its access to overseas capital markets heightened concerns about Chinese companies’ access to overseas capital markets.
Regulators in China have become increasingly restrictive around privacy and national security issues and that’s slowing the growth of foreign listings. Failure to reach an audit agreement with the United States may lead to a significant amount of Chinese companies being removed from the New York Stock Exchange.
Businesses looking to list in China, as well as Hong Kong, must usually fulfill more demanding criteria than U.S. businesses do.
EY found that 920 companies were in line to go public in mainland China and Hong Kong as of June 14. This is little changed from March.
Multiple Chinese companies lining up
The Chinese companies that are able to do so are turning to Switzerland in the meantime while the IPO process is clarified.
Following a conversation on Thursday morning, July 28, Wang said a client contemplating an IPO in Hong Kong chose a GDR listing in Switzerland ahead of a Hong Kong listing.
13 Chinese listed companies have already indicated their intent to sell shares ahead of the upcoming China-Swiss investment cooperation, said Wang. Other companies are, too, but they haven’t announced anything yet.