Stricter supervision of IPO roadshows set by Chinese regulators
Just a couple of months after China's securities regulator revamped its rules to deter overpricing in initial public offerings, the China Securities Regulatory Commission is set to supervise companies scheduled to have their share sales more strictly, Bloomberg reported.
The CSRC intends to conduct spot checks of investor roadshows that will be held for first-time sales and issue a suspension to firms found to give information that are not found in their IPO prospectuses as well as other public documents. The statement on the CSRC website added that penalties will also be in store for underwriters that will give institutional investors information not given publicly, Bloomberg reported.
The more stringent measures came in the wake of regulator approval given to 50 firms to hold share sales in China under the new policies rolled out last year which are geared towards weeding out price manipulation and giving more protection to investors. Last week, Jiangsu Aosaikang Pharmaceutical Co postponed its CNY 4.05 billion or $669 million IPO after it had priced their offer 21% higher than the average of the industry, the report said.
The report quoted UBS AG's China Equity Strategist Chen Li who said the regulator was unable to curtail overpricing of new share offerings. Chen said that share sales will happen at an unprecedented rate, with IPOs in China numbering 60 to 80 a month in the three months that will end in June.
Aosaikang said on January 10 that it would be delaying its IPO since the sale would become "relatively large." Citing figures from Shenzhen Securities Information Co, the company said the deal would put the value of the cancer drugmaker at 67 times its earnings in 2012 which is more than the average 55.3 times for drug manufacturers listed on the ChiNext, the report said.
As part of the stricter measures outlined yesterday, the CSRC required firms looking to price their IPOs at higher valuations compared to the average in the industry to create risk disclosure reports on a weekly basis before it would start offering the stock to investors, the report said.
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