The recent listing of OneSmart in New York serves as a good reference for similar transactions involving the building or rebuilding of red-chip structures, said the issuer’s legal counsel in the deal.
OneSmart Education Group, a Chinese company that owns a number of education brands, recently made its successful listing on the New York Stock Exchange. Prior to the listing, the company completed the restructuring of its red-chip structure and offshore private equity financing.
This transaction is said to be one of the first projects in the market that involved both the unwinding and rebuilding of a red-chip structure.
King & Wood Mallesons (KWM) advised OneSmart on this listing. “Many red-chip structured companies terminated the red-chip structure and move the holding company back to China, but only a few completed successful listings on the A-share market,” Richard Nie, a partner at KWM in Shanghai, told China Business Law Journal.
“With the positive changes in the overseas markets, we expect more companies will rebuild their red-chip structure and seek an overseas listing. Not to mention that many domestic structured companies – with existing renminbi investors – will also consider the option of overseas listing. The building or rebuilding of red-chip structures of those companies with existing renminbi investors will likely face similar challenges to those in this project.”
In this transaction, KWM led the development of the restructuring plan, the drafting of the restructuring documents, the implementation of the restructuring, negotiations with several overseas investment institutions, and the drafting of the financing documents. The KWM tax team also took part in the tax planning and declaration work for some shareholders, and the wealth management team assisted some shareholders to set up offshore trust structures.
The private education sector in China has been hot in the capital market in recent years, according to KWM.