With the increase in the support for the listing of "Unicorn", the Chinese version of the Depositary Receipt (hereinafter referred to as CDR) is gradually approaching.
The China Securities Regulatory Commission issued the "Some Opinions on Launching Pilot Projects for Issuing Domestic Shares or Depositary Receipts within the Innovative Enterprise" at the end of March. After clearing the CDR as a unicorn listing support path, many large-scale PE institutions and intermediary agencies are in the right position. The details of the opportunities and policies are given attention.
A few days ago, 21st Century Business Herald reporter learned that many organizations believe that supervision will be expected to announce more policy details in the promotion of CDR.
April 16, CITIC Industrial Fund chairman and CEO Mr Liu response to this reporter said, from the current disclosure of information point of view, CDR system has launched a pilot means; but I believe that at the same time, the Commission will publish more implementation details next .
Waiting for normalization
On April 16, an investment banker close to Xiaomi disclosed that while the company was listed in Hong Kong, it was also conducting research and promotion on the listing in the mainland through the CDR mechanism and contacted some intermediary agencies.
Multiple signals indicate that the CDR window is approaching.
“Because the previous structure and legal preparations have always been reserved for listing in Hong Kong, it is more probable that CDRs will first be listed in Hong Kong,” said a person close to Xiaomi.
The trend of Xiaomi is not a case. A large securities company in Beijing has adopted a strategy.AnalystWhen interviewed, they pointed out that if the supporting policies and the market environment are stable, the project that will launch the CDR within the year will become a highly probable event, and investors’ expectations have also been formed.
Faced with the CDR's window expectations, different agencies are also strengthening their focus and grasp of this policy.
Liu Lefei believes that the promotion of the CDR system will bring more positive changes to the Chinese capital market.
"First of all, the CDR system has demonstrated its flexible and pragmatic side in the short term. Without breaking the "Securities Law", it has broken the restriction that foreign companies cannot directly list on the A shares, and shortened the return of new economic enterprises. A share's time." Liu Lefei told reporters in the 21st Century Business Herald that this is in line with the current macroeconomic policy orientation that China urgently requires the capital market to support industrial upgrading and technological innovation.
According to Liu Lefei, the CDR mechanism is also a simplification of the traditional Back-to-A process such as “privatization-IPO or backdoor”. "Before the CDR trial, overseas listed companies need to be privatized overseas before returning to A-share IPOs or backdoors. The process is cumbersome, takes a long time, and has high uncertainty." Liu Lefei said.
The arrival of CDR will affect the valuation center of A-share stock companies.
"The increase in the issuance and circulation of stocks brought by the CDR has resulted in a higher market value of the unicorn enterprises and better fundamentals, and it is easy to attract more market funds to chase." A person in charge of a Beijing-based PE agency said: "Without incremental funds, Into the next, this may lead to a decline in the level of A-share bubble, but also make the potential return on investment in the primary market decline."
“It is foreseeable that the CDR system will bring about changes in the supply side for domestic securities issuance quantity and quality, and also provide more options for domestic investors to allocate new economic industries.” Liu Lefei also said, “but at the same time it will also give A shares existing shells. Companies, restructuring of the subject matter companies, and the TMT sector brought certain valuation pressures.”
The person in charge of the PE stated at the same time frankly stated that due to the initial stage of the CDR pilot project, the number of projects is scarce, and most PE organizations need to wait for the normalization of the system to fall into place. "There are currently only 8 CDR pilot companies in the rumors. The participation of PE institutions is limited, but after this system is normalized, more and more exclusive beasts have the ability to be listed. The opportunity for PE will also come." The person in charge said.
Focus on detail design
Liu Lefei believes that the current CDR mechanism has a strong "pilot interest" and a high threshold.
According to the opinion states that, for the overseas listed red-chip large-scale enterprises, the pilot enterprise value not less than 200 billion yuan; and yet for innovative enterprises listed overseas, the most recent year operating income of not less than 3 billion yuan and estimates The value is not less than 20 billion yuan, or meets the conditions of "rapid growth in operating income, having independent research and development, leading international technology, and being in a relatively dominant position in competition with the industry".
In the industry view, this condition although clearly a "unicorn" threshold, but such rapid revenue growth, the world's leading technology and other conditions are still provisions in a more vague; so do not rule out the follow-up regulators will launch more refined Implementing Regulations.
The above-mentioned strategist said: "Now, the lines for entry barriers are still relatively thick, and in specific operations, there may be more detailed standards."
Liu Lefei said that he believes that the SFC will announce more implementation details in the next step; in fact, the "Opinions" have indeed made it clear that the "specific standards" for pilot companies are set by the China Securities Regulatory Commission.
According to Liu Lefei’s expectations, the CDR’s stock conversion, financing functions, and trading mechanisms will all become possible implementation rules.
"From the medium to long term, in accordance with the regulatory intent CDR pilot could effectively landing, achieve economies of scale and better liquidity, but also on its design implementation details, including CDR hosting source of stock, and whether the underlying stock to achieve free conversion, energy Whether there is a financing function, whether there is a market maker, etc., these are worth the market to maintain sustained attention." Liu Lefei thinks.
As part of the reform of the supply side of the capital market, the CDR pilot will provide more experience and practices for market development.
Mr Liu believes that "the introduction and practice of CDR system, is a positive step in the reform of China's capital market side of supply, but also the further internationalization of China's capital market signs also can provide meaningful empirical evidence for the distribution system reform and China's future deeper Theoretical thinking."
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