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China Increases IPO Oversight

China Intensifies IPO Scrutiny Amid Market Reforms

Posted on May 10, 2024
Writer: James Miller

Chinese authorities have increased their oversight of companies seeking to go public, intensifying on-site inspections of even senior executives’ personal financial details. 

As the China Securities Regulatory Commission (CSRC) states on its website, this heightened scrutiny aims to slow the pace of new capital market entries and bolster secondary markets.

The regulatory body is planning to inspect 20% of listing applicants this year, a substantial increase from last year. 

Already, over 130 companies withdrew their IPO applications in 2024, including a notable cancellation by Swiss group Syngenta of a planned $9 billion offering in Shanghai. 

Such actions brought IPO activity in mainland China to its lowest level since 2013, with funds raised plunging nearly 90% to $2.6 billion in the first four months of the year.

This scrutiny extends also to underwriters, who face increased risks of regulatory consequences. The stringent vetting process impacted the investment banking sector, with equity-related underwriting fees plummeting 77% year-over-year to $301 million in the first quarter, marking the lowest since 2009. 

For more information, read the full article on Reuters.

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