From Asia Financial: 2024-05-08 08:01:16

China has tightened regulations on IPOs, leading many firms to withdraw applications. Regulators are scrutinizing deals and executives, leading to a 90% drop in listing funds. The freeze on IPOs has darkened prospects for investment banks and dealmakers, with underwriting fees plummeting. The crackdown aims to improve the quality of listed companies but has raised concerns about corporate fundraising in a slowing economy.

The stringent inspections involve seizures of mobile phones and laptops, with authorities probing transactions and personal bank accounts of executives. The CSRC plans to inspect 20% of listing applicants this year, four times last year’s goal, as part of efforts to boost company quality and curb fraudsters. The crackdown has impacted investment banks and dealmakers financially, prompting some to leave the business.

New CSRC chief Wu Qing, nicknamed the “broker butcher,” is leading the campaign to improve listed company quality. This crackdown on IPOs has led to a near freeze in new listings, with authorities closely scrutinizing every aspect of potential IPO applicants. While the regulatory measures aim to protect investors and weed out problematic companies, they have had a significant impact on investment banking activities and dealmaking in China.

Authorities are intensifying scrutiny of IPO applicants, demanding thorough health checks and combing through financial records, personal bank data, and transactions. Underwriters for potential IPOs face questioning and risk getting stuck in regulatory crosshairs. The crackdown on IPOs has created difficulties for investment banks and dealmakers, with many facing significant financial challenges and uncertainty about the future of their businesses in China.

China’s rigorous vetting process for IPOs has caused a dramatic slowdown in new listings, impacting investment banking activities and dealmaking. The crackdown aims to enhance the quality of listed companies and safeguard investor interests, but it has raised concerns about the challenges of corporate fundraising and market-oriented reforms in a slowing economy.



Read more at Asia Financial: Over 130 Firms Drop IPO Plans as China Ramps up Scrutiny