China Investigation Triggers Delay in 60+ IPOs

China, IPO

More than 60 initial public offerings (IPOs) across China — including Deutsche Bank AG’s Chinese securities venture — are on hold as regulators look into the law firms and underwriters behind them, Reuters reported Friday (Jan. 28).

Chinese stock market disclosures from Wednesday (Jan. 26) showed that 12 planned IPOs in Shanghai’s STAR Market, the tech hub of the nation, and 48 more in Shenzhen’s startup cluster ChiNext were on hold as the investigation into the backers behind them continues, the report says.

Each of the 60 companies seeking a public launch had hired one or more of three companies being investigated by securities regulators: Zhong De Securities Co. (a joint venture between Shanxi Securities and Deutsch Bank), accountancy firm SineWing and law firm King&Wood Mallesons, the report said.

The companies all advised Leshi Internet Information and Technology, which was charged in March with accounting fraud between 2007 to 2016 by the China Securities Regulatory Commission (CSRC).

China has vowed “zero tolerance” on securities and accounting fraud, the report says.

Among the proposed STAR Market IPOs candidates are Beijing Tongmei Xtal Technology Co., Nexchip Semiconductor Corp. and State Grid Intelligence Technology Co. ChiNext-backed companies hoping to go public include Longkou Union Chemical Co., Zhejiang Sling Automobile Bearing Co. and drugmaker Tianjin Tongrentang Group Co.

Related: Payments Firm PingPong Considers $1B IPO

Earlier this week, Bloomberg News reported PingPong, a Chinese startup that helps eCommerce merchants make cross-border payments, is considering an IPO to raise up to $1 billion and could come to the Hong Kong markets later this year after considering a listing in mainland China.

PingPong will also try to raise around $300 million in a pre-IPO funding round, according to the Bloomberg report, noting that the company is valued at $5 billion. The company achieved “unicorn” status in 2020, meaning its value rose above $1 billion before it went public, reaching $1.5 billion by the end of that year.