Baling is 1st to scrap IPO after failure
By Lydia Chen |
00:14 UTC+8 June 9, 2011
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Print Edition
Print Edition
NANNING Baling Technology Co has become the first firm on Chinese mainland to cancel its initial public offering after formally launching it because it failed to attract the required 20 institutional investors for a price bidding exercise.
The cancellation was the first ever in the 20-year history of the mainland's stock markets.
Baling, a small producer of auto ventilators for domestic auto makers, planned to issue 18.9 million shares to raise about 300 million yuan (US$46.3 million) on the Shenzhen Stock Exchange.
The company, which reported a net profit of 73 million yuan last year, was due to settle its IPO price yesterday.
But Minsheng Securities Co, the book runner for Baling, only attracted bids from 19 institutional investors during a book-building process, one fewer than the required 20 institutions. Chinese regulations stipulate that any firm seeking to launch an IPO need at least 20 institutions to bid for its shares in the book-building process.
Theoretically, Baling may still relaunch its IPO by October, according to the country's stock regulations.
Some analysts said the scrapping signaled a clear refusal by investors annoyed by unreasonably high valuations.
In order to boost income some book runners would deliberately ask institutional investors to push up their price bidding. But this will result in the IPO price being highly distorted from its real value when the company debuts in the stock market. Previous new listings doubled or even tripled on their first day of trading, only to plunge after.
The cancellation was the first ever in the 20-year history of the mainland's stock markets.
Baling, a small producer of auto ventilators for domestic auto makers, planned to issue 18.9 million shares to raise about 300 million yuan (US$46.3 million) on the Shenzhen Stock Exchange.
The company, which reported a net profit of 73 million yuan last year, was due to settle its IPO price yesterday.
But Minsheng Securities Co, the book runner for Baling, only attracted bids from 19 institutional investors during a book-building process, one fewer than the required 20 institutions. Chinese regulations stipulate that any firm seeking to launch an IPO need at least 20 institutions to bid for its shares in the book-building process.
Theoretically, Baling may still relaunch its IPO by October, according to the country's stock regulations.
Some analysts said the scrapping signaled a clear refusal by investors annoyed by unreasonably high valuations.
In order to boost income some book runners would deliberately ask institutional investors to push up their price bidding. But this will result in the IPO price being highly distorted from its real value when the company debuts in the stock market. Previous new listings doubled or even tripled on their first day of trading, only to plunge after.
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