Going public in China is proving to be something of an uphill battle for fintechs, and new guidelines released by the China Securities Regulatory Commission (CSRC) are only further complicating the process.
Speaking with EY’s Asia-Pacific IPO leader, Ringo Choi, CNBC reports that few firms across the fintech sector have been able to list on exchanges in Shanghai and Schenzen.
“For financial technology, you can see that…some of the largest one(s), if they’re competing with the bank or insurance company, they will have a hard time.”
One of the CSRC’s guidelines released last Friday states that financial technology companies are banned from listing on the STAR board, the NASDAQ-style tech board officially called the Shanghai Stock Exchange Science and Technology Innovation Board. The release read: “Real estate and firms mainly engaged in financial services and investment businesses are prohibited from listing on the Science and Technology Innovation Board.”
The sentiment around listings appears to have shifted dramatically since late 2020, when predictions around a slew of planned domestic start-up listings painted the country as an expected IPO leader for 2021.
Yet, with December’s dramatic suspension of Ant Group’s plans for a dual-listing in Shanghai and Hong Kong, CNBC believes Beijing signalled a turning point on its stance toward Chinese technology giants and fintechs. As a result, some fintechs may be reconsidering their approach to going public, looking to the ‘rectifications’ Ant Group has been required to make.
Reuters reported over the weekend that Ant Group is exploring ways for founder Jack Ma to exit the fintech, divesting his stake and giving up control of the business, as a means to “help draw a line under Beijing’s scrutiny of its business.”
Ant Group denied the claims on its Twitter account, labelling them as “untrue and baseless.”
While Chinese fintechs may struggle to listing on the mainland, they are able still able to take alternate routes by going public in Hong Kong or the US.