They're like orphans floating overseas.

Abstract: They are like orphans floating abroad. Hu described the marginalization of Chinese companies listed overseas. A few years ago, many Chinese companies were piling up for overseas listings. A few years later, some become global famous enterprises, and some become overseas orphans, the company

"They are like orphans floating abroad." Hu described the marginalization of Chinese companies listed overseas.

A few years ago, many Chinese companies were piling up for overseas listings. A few years later, some become global well-known enterprises, and some become "overseas orphans", the company's stock no turnover, in the listing and domestic no one to pay attention, refinancing is no door. and the annual maintenance costs are the same.

At the same time, the domestic a-share a sudden rise, to open the door to private enterprises; within two or three years, venture capital from a very highbrow concept, into the national PE, these PE in the domestic carpet-type scouring "project." They and "overseas orphans" hit, the Chinese concept stocks are hunted more as the east wind, so that individual phenomenon into a trend.

May 26, GGV Capital Partner Zhuo, overseas investment bankers and lawyers specializing in PE business, said in an interview that overseas enterprises, more choice to go to H-shares listed, mainly because the demolition of the original structure of the overseas is very troublesome.

However, under the high price-earnings ratio of a-share, there are still brave. Zhu Yufa, chairman of the London-listed company, which has already been privatized, said, "Dong LAN Digital Co., Ltd.", told reporters that it would sprint a a-share IPO, Campeng chemistry (NYSE.CPC), the first show of the Spring Fund, and a company insider that "it's a long-term direction to go home".

Zhuo also said that there are some very suitable for a-share listed companies, such as Chinese herbal medicine industry companies, willing to wait longer to return to the shares listed.

Overseas listings: Get it? Lost?

When overseas markets are not good, many Chinese companies opt out – withdrawing from overseas markets and returning to domestic capital markets.

A few years ago, private enterprises in the domestic market is difficult, bank loans are not so easy, in order to raise funds, collectively to the overseas listing.

Before going public, these private entrepreneurs have had all sorts of good ideas. However, it is not easy to tell a Chinese story to a person who has yellow hair on his skin. Do not tell the story of the enterprise, its share price downturn does not say, P/E is very low, stocks have no turnover, refinancing into wishful thinking. If the IPO, at least at that time, was also a sum of money, and those who are listed on the shell, they have not enjoyed as a listed company benefits.

The first company to return from overseas listing to the A-share listing enterprises is the Southern power supply (300068.SZ). South of the main power supply company, 2000 in Singapore Shell listing, 2005 retreat, the early 2010 landing a A-share gem.

South Capital Power Company told reporters: "In Singapore, the intention is to obtain financing to promote the development of enterprises, the result of the market is not active, not financing." On the contrary, it is too much trouble to have a shareholder meeting. We took the initiative to retire the city. ”

Anecdotal speculation, the southern power of the actual control of the Zhouqing can be so cool from Singapore, there is a reason is that before and after he was planning his property company listed. It was not clear why, in 2004, the asset had been approved for a-share IPO, and then Zhouqingzhi abandoned the IPO.

But the obligation of the listed company, is the real cash outflow.

May 26, with Zidong (NYSE.TCM) chief operating officer Chen with reporters paying: "The United States listed companies are higher maintenance costs than a-share and H-shares." This cost is mainly divided into the cost of compliance and investor relations. The former is legal fees, audit fees, the cost of issuing bulletins, in addition, 404 of the Company's internal control requirements. This piece of our company spends not less than 1 million dollars a year. ”

"Another is investor relations, including a dedicated service company, one-year roadshow two or three times, recommending companies to European and American investors and potential investors." Both add up to a year of spending between 2 million and 3 million dollars. "Chen said.

"Many Chinese companies underestimate the cost of listing, thinking that it is the cost of packing and listing," said Ma Jun, chief representative of the US securities company in China. After a company is listed, in order to reduce maintenance costs, will be cheaper lawyers and auditors, which is also a way to the annual maintenance costs compressed to 1 million U.S. dollars. However, when confronted with litigation, it is easier to be confined to the passive position. These agencies, how much money to do how much. ”

Zhu Yu Law told reporters, because the stock has no turnover, then they simply do not play, and no longer ask a special service company to do investor relations. In this way, even if you understand the cost of stealth maintenance such as the CFO of international capital markets, the maintenance costs of this year will not exceed 1 million dollars.

"However, the stock price is too depressed, we can not refinance, the original listing of the meaning is completely lost." Moreover, as small and medium-sized enterprises, the main market for domestic, overseas listing in improving the company's reputation and influence, not help. Even if the bank loans, banks are also looking at the strength of the company, we have low prices overseas, low market value, may mislead the outside world, underestimate the strength of the company. ”

It is well known that the large shareholder of a A-share listed company can at least mortgage the company's shares to bank loans. It is also customary for major banks to lend money to listed companies.

Ma Jun told reporters that many Chinese companies listed in the United States are listed by reverse takeover. Reverse acquisition, similar to a shares of the shell listing, the listing did not melt into the capital. "Half of this group of companies may not have been refinanced," says Ma Jun. ”

When overseas markets are not good, many Chinese companies opt out – withdrawing from overseas markets and returning to domestic capital markets.

Return to a A-shares or Hong Kong stocks?

"The market is mainly in the domestic enterprises, return to a-share listing, than in the H-shares conducive to increase visibility." And some of the very large, the future of cross-border mergers and acquisitions of enterprises, is more suitable for H-share listing. ”

After privatization, A or H, this is a problem.

Originally from abroad to withdraw from the market, to Hong Kong stock market, there is no arbitrage space. May 27, Morgan Stanley's managing director Lou just said: "In the Chinese concept stocks, information companies in the United States, the price/earnings ratio, originally higher than the H shares." American investors are able to value their 2015 earnings, which many H-share investors have no way to accept. Traditional industries, such as manufacturing and food, have been valuing H shares. ”

Lou Just analysis: "This round of stocks fell a lot, and many Chinese concept stocks were hunted, the company was hunted down the share price, other not hunted enterprise share price also fell." After that, information stocks, the US and H-shares, have a similar earnings ratio, and in traditional industries, stocks have a much bigger gap than H-shares. ”

"The massive Chinese concept stocks are plotting to retire, starting with the Chinese concept stocks being hunted on a massive scale," Ma Jun said. As far as I know, prior to this announcement, only Tongji and Snen. ”

The return of "overseas listed orphans"

And a-shares, the price-earnings ratio has always been higher than overseas markets. GEM Board since the board, the Gem and the SME Board of the price-to-earnings ratio is staggering. At the end of last year, many small stocks were issued at 80-100 times earnings. Lian Yonghui Supermarket (601933. SH) is 70 times more than the board stock. The Gem and the SME board are the main listed positions of the private enterprises.

Another big difference between a-share and H-shares is that the company must also dismantle its overseas structure and become a domestic enterprise when it returns to a a-share listing. In addition, it is difficult to wait for the SFC to be audited.

The attraction of H-shares is simple enough. Zhuo told reporters: "If the overseas companies just retreat from the market and return to the H shares listed, it is actually easier than the IPO has never been listed." Because the former financial statements, corporate governance structure have been compared to the standard. ”

A Shanghai lawyer who has done two single ventures in overseas companies has also told reporters: "If you go to H-shares, it does not involve changes in the subject of the listing, it is really easier than a company that has never made an IPO." But some companies want to go back to share shares and inject new assets, which can be troublesome. ”

Shanghai lawyers mentioned above, from overseas to return the city, do a good job, more than half a year can be done. And from the announcement of the return to completion of the city, a total spent a year of time Tongji Hall, but is a special case.

Chen to reporters: "In 2009, the registration of Cayman's company law has changed." As far as I know, we are the first NYSE listed company to complete the delisting by merging transactions under the new company law, and the parties need time to understand the new terms. ”

So, return to a A-shares or H-shares, it seems to become the actual control of the company and PE investors a choice-to be a high price/earnings ratio, or to quickly listed, the money fell bag for Ann?

This is not the case. Yin Yu-sun, general manager of Shanghai Zhejiang region of Shen Chong Investment Group, said that the first purpose of listing is often financing, and the second is to raise the popularity and brand.

"The market is mainly in the domestic enterprises, return to a-share listing, than in the H-shares conducive to increase visibility." And some of the very large, the future of cross-border mergers and acquisitions of enterprises, is more suitable for H-share listing. ”

Ma Jun said most of the companies that are now retreating from overseas want to return to Hong Kong. The lawyer also said that he had done two orders, the company is going to the Hong Kong stock market. Other projects He knows are also in the majority of Hong Kong stocks.

PE Pushing Hands

In general, RMB funds will be slightly more advanced when they invest in such projects. The dollar fund is willing to enter when the company has not yet returned to the market.

Mighty return to the public tide, behind never lack of PE fund figure.

Kam Tiancheng Law firm partner Zhangxiaojong told reporters: "Many overseas listed companies, but also in privatization, began to talk with PE." General delisting, PE entry, two things are carried out at the same time. ”

June 2010, Deep Venture investment and other PE funds have entered the shareholder Blue Digital, this project, it is Yin Yu-sun is responsible for casting. Yin Yu-sun told reporters: "The East Blue Digital has not returned to the market, we have talked to them." But really go in or after the company has been completed privatization. ”

Zhu Yufa admits: "Privatization is basically my own money to do." After finishing, the company cash more nervous. At this time, deep venture investment and other institutions came in, they came in a price-earnings ratio of about 10 times times. To tell you the truth, I am very satisfied with this multiple. ”

Yin Yu-sun told reporters: "I vote for such projects, not because the company is to dismantle the overseas structure, and quote a lower price." I am simply looking at the company itself. With the East Blue Digital contact, the south of the power has not been listed, at that time did not know this overseas delisting companies can be listed in a shares. I even think well, if the regulatory level does not agree, let the East Blue digital back after three years, before listing. ”

And at present, the brokerage has entered, soon to the East Blue Digital to do shareholding system transformation. The East Blue Digital return the way of IPO, still calculate smoothly.

In addition, Yin Yu-sun said, such projects, deep venture did not do much, to the present only two or three single. He believed that, because the South all power supply successful market demonstration effect, after the PE fund to intervene similar project phenomenon, certainly will be more and more.

Hu's Spring fund, the first to see media projects, is the U.S. listed company Campeng Chemistry. In early May, Campeng Chemical Bulletin to the U.S. SEC to submit a privatisation application. The plan was funded by Hu's Spring fund.

Campeng Chemical Research and Development Department and Administrative department, located in the northwest of Shanghai, its 6 factories are scattered in Shanghai Fengxian and Jiangsu and Zhejiang. Campeng Chemical main products for fine chemicals. The head of its administrative personnel, Ms. Sun introduced, Campeng chemical all products, are all exports. Ms. Sun declined to comment on privatization. Just said, "back to the domestic listing is a long-term direction", and the company also intends to open up the domestic market.

The role of Hu and the Spring fund in the privatization of Campeng chemistry is unknown. Hu's secretary said that the return of the city has not been completed, he has a confidentiality clause, can not be interviewed.

Several industry insiders also told reporters that there would be no difference in P/E ratios when investing in overseas delisting companies or companies that have never been listed. In general, RMB funds will be slightly more advanced when they invest in such projects. The dollar fund is willing to enter when the company has not yet returned to the market.

"But the dollar fund also has good self-preservation measures," one industry insider told reporters. For example, the listed companies to the dollar funds to send convertible bonds in the way. In this way, the fund has no risk and the main risk is borne by the entrepreneur. will be able to be listed in the H shares, the fund would be in the hands of the debt to equity; Moreover, the terms of the convertible bonds are often accompanied by repurchase clauses, and the dollar Fund can initiate repurchase clauses once the corporate profits are not reached. ”