Mar 09, 2018 07:08 AM

Foxconn’s Unit Gets Speedy Approval for Shanghai IPO

Jiang Yang, vice chairman of China’s security regulator, said the listing of Foxconn would be a “good thing.” Photo: VCG
Jiang Yang, vice chairman of China’s security regulator, said the listing of Foxconn would be a “good thing.” Photo: VCG

Foxconn Industrial Internet, a unit of the world's largest contract electronics manufacturer that assembles Apple's iPhones, won speedy approval on Thursday for its initial public offering in China.

The approval took just 36 days — a breathtaking pace in China that underscored the county’s determination to attract new economy companies to its stock markets.

Foxconn Industrial’s IPO approval was the fastest ever in a country where companies often wait one to two years before being allowed to go public, according to a securities brokerage source.

Several people close to the China Securities Regulatory Commission told Caixin that Foxconn went through a special expedited path. It filed on Feb. 1.

The unit of Taiwan’s Foxconn, formally known as Hon Hai Precision Industry Co., said last month it plans to use proceeds from the listing to fund eight projects totaling 27.3 billion yuan ($4.31 billion).

Jiang Yang, vice chairman of the CSRC, speaking on the sidelines of the ongoing annual legislative meeting in Beijing, said the listing of Foxconn would be a “good thing,” domestic media reported.

The quick approval comes as the CSRC is trying to entice its tech startups and overseas-listed giants to trade their shares at home.

The regulator said in a statement last month that it will “reform the listing mechanism, increase the mechanism’s tolerance and adaptability, and give more support to new technology, new industry, new industry forms and new business models.”

Zhang Shenfeng, an assistant chairman of the CSRC, said in January that China should try to “keep good companies at home” and “allow them to list as soon as possible.”

Zhang made the comments at Beijing’s Zhongguancun Technology Park, dubbed China's Silicon Valley because it is home to many Chinese tech firms such as Nasdaq-listed e-commerce giant Inc.

Many Chinese tech companies prefer to float in the U.S. or Hong Kong because of more flexible listing rules and access to international investors. Regulators are considering issuing China Depositary Receipts (CDRs) — modeled after American Depositary Receipts — to enable overseas-listed Chinese companies to list in home markets.

Chinese leading smartphone maker Xiaomi Inc., which is planning to list in Hong Kong this year, has agreed to float part of its shares on the mainland market through CDR issuance, a source close to the matter told Caixin.

In January, the CSRC shortlisted around 30 tech companies, most of them with valuations in excess of $5 billion, as preferred firms for a possible domestic listing. Officials have visited each of the companies to study their operations, Caixin learned from sources close to the matter.

The CSRC granted approval to Foxconn’s IPO even though the company isn’t eligible under the mainboard listing requirements.

At the time of its application, the Foxconn unit had less than the three years of continuous operation that is required for listing on the Shanghai mainboard. Foxconn's prospectus said it had won approval from the State Council for an exemption.

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