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02 October 2019
ECONOMY

China approves first dual-class IPO in bid to lure tech firms

The approval follows reports that Trump administration is considering various measures to limit US investors’ exposure to Chinese assets, including possible delisting of Chinese firms from US exchanges.

BLOOMBERG/QILAI SHEN


China is set to see the first dual class listing in the domestic market, as the nation aims to stem an exodus of technology firms seeking listings overseas, reported Bloomberg.

Chinese cloud storage provider UCloud Technology obtained approval from the Shanghai Stock Exchange for an initial public offering (IPO) on the Star market.

In a bourse filing, three of UCloud’s shareholders currently own a combined 98 million A-class shares of the company, about 27 per cent of the firm’s total issued shares. These three represent the combined voting rights of 65 per cent. The company aims to raise about CNY 4.7 billion ($660 million) via the IPO.

The approval follows reports that Trump administration is considering various measures to limit US investors’ exposure to Chinese assets, including possible delisting of Chinese firms from US exchanges.

Although a US Treasury official said that there are no current plans to stop Chinese companies from listing on US bourses, Citigroup analysts including Alicia Yap wrote in a research note that US-listed Chinese firms may see negative overhang to last for a while and those with ADRs may consider a dual listing in Hong Kong and eventually listing back in China.

China launched the NASDAQ-style Star market in the middle of this year, a new trading venue that is the only one currently allowing companies with dual-class share structure to go public. UCloud still needs to register with the China Securities Regulatory Commission for its offering.


RELATED STORIES: UCLOUD TECHNOLOGY SHANGHAI STOCK EXCHANGE IPO NASDAQ-STYLE US TREASURY

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