Chinese companies’ interest in overseas listings has been on the rise thanks to a filing mechanism implemented earlier this year and an improving external environment, said experts. Textile supplier Majestic Ideal Holdings is one such company eyeing an offshore debut. According to a document released by the department of international affairs of the China Securities Regulatory Commission (CSRC) on July 26, the company’s filing for listing on the Nasdaq has been approved. This will make Majestic Ideal Holdings the first company to have completed the filing process with the CSRC since the filing mechanism for Chinese companies’ overseas listings took effect on March 31. According to the prospectus, Majestic Ideal Holdings plans to issue no more than 2.875 million shares on the Nasdaq at between USD4 and USD5 per share. Majestic specializes in the production of yarn and garments. In the fiscal year to September 30, 2022, Majestic reported an annual sales revenue of USD16 million, while its net profit came in around USD1 million, according to its prospectus.
Ever since the new mechanism took effect at the end of March, a total of 86 companies had submitted their overseas listing applications to the CSRC as of July 20, according to data provided by the regulator, with 63 companies going to the Hong Kong bourse. The rest plan to float on the Nasdaq or the New York Stock Exchange (NYSE). Applications have sped up in the second half, with 31 companies submitting applications since early July, outnumbering recent monthly applications. Ten applications have been approved so far. Besides Majestic, the rest will be IPOs in Hong Kong.
Approvals have also been accelerated. While only two companies were given the approval in May and none in June, eight companies have received the green light from the top regulator in July. During its mid-year work conference on July 25, the CSRC said that the filing mechanism for Chinese companies’ overseas listings should be better managed, which is conducive to deepening the reform of the capital market. A total of 19 Chinese companies have successfully listed in the United States in the first half of this year, up 375% year-on-year. Total proceeds rose 503% year-on-year reaching USD603 million. Chinese companies will be more upbeat about listing in the U.S. thanks to the oversight cooperation agreement that regulators from the two countries reached last August, the China Daily reports.
