China Sees Record Year in IPOs

2017 is already a record year for initial public offerings (IPOs) in China despite a marked slowdown in the approval of new listings in recent months, a senior securities regulator said.

Xuan Changneng, assistant chairman of the China Securities Regulatory Commission (CSRC), told a forum in Beijing that the regulator had given the green light to 359 IPOs out of 503 applications during the first 10 months of this year. That total has already surpassed the previous yearly record of 347 successful IPOs in 2010, Xuan added.

In defense of the recent slowdown in approvals, Xuan said the move was to maintain the quality of listed companies. Nevertheless, the high number of approvals this year indicated that CSRC chief Liu Shiyu has kept his word to allow more companies to go public, Xuan said.

“The CSRC rejected companies that failed to meet the requirements of IPOs, so that we can clean up the market while sending a strong message to the market regarding misconduct,” Xuan said Monday.

“The (slowdown) also aims to provide more resources to companies of good quality, as well as the ones that fit the national development strategies,” he said.

About 500 IPO applications are now awaiting regulatory review, down sharply from 895 as of the end of June, Xuan said. Not only has the backlog of applications cleared up a bit, but a company on average now needs to wait only 15 months from when it applies for a listing to when it starts trading — much faster than before, when it usually took up to three years.

“Toward the end of this year, the panel will likely get to review IPO applications filed this year” as the CSRC is still reviewing applications submitted last year or earlier, Xuan said.

A CSRC review panel that was reshuffled in October has OK’d 57% of IPO applicants through November. That figure is down from 81% during the previous committee’s tenor, which lasted the first nine months of the year.

The slowdown in IPO approvals comes at a time when several CSRC officials who reviewed and approved now-financially crippled Leshi Internet Information & Technology Corp.’s listing plan in 2010 are being investigated by judicial authorities on suspicion of corruption. Also, the composition and workflow of the panel was also changed to prevent corruption, but some bankers believe that has led, at least in part, to fewer IPO approvals.

Contact reporter Leng Cheng (chengleng@caixin.com)