Finding the right fund-raising or investment tools in China’s capital markets is an increasingly complex exercise. Richard Li offers a guiding compass
Fund-raising channels for Chinese companies are becoming increasingly diverse as a result of the force of the market environment and the impetus of policies and regulations.
According to data released by the China Securities Regulatory Commission (CSRC), the amount of funds raised under initial public offering (IPO) projects in the A-share market dropped about 63.4% in 2012 from 2011. Despite pressure from the continued downturn in the stock market, the CSRC has chosen to suspend the approval of new share issues since the fourth quarter of last year.
As the regime for a multi-level capital market improves in China, “it will now be mainstream to raise capital through a number of channels other than IPOs”, says Zhou Man, a lawyer at Lantai Partners in Beijing. “In the long run … IPOs as a myth for Chinese companies flocking to cash in will be gone forever in China’s capital market.”