Ant Financial, the financial services affiliate of China’s Alibaba Group, plans to go public on the new technology innovation board being established by the Shanghai Stock Exchange, according to a mainland media report.
Knews reports, citing an anonymous source, that Ant Financial is preparing for a listing on the upcoming tech board in Shanghai.
Targeting to attract domestic tech firms seeking initial public offerings, Shanghai’s technology innovation board will adopt a loosely-regulated listing mechanism, potentially competing with Hong Kong, as well as Shenzhen’s tech-heavy ChiNext board, or even New York’s Nasdaq.
Chinese tech media AWTMT quoted a representative for Ant Financial as saying that the technology innovation board is a major institutional innovation in China’s capital market.
“As an innovative technology company, Ant Financial is closely watching [it]… at present, Ant Financial has no timetable for listing,” said the representative.
Depending on the progress of the new tech board, Ant Financial is unlikely to be among the first batch of domestic tech firms listing on it, a mainland media outlet quoted a delegate from the Chinese People’s Political Consultative Conference (CPPCC) as saying.
The delegate claims to be overseeing an equity firm that is backing Ant Financial.
On the sectors able to list, the technology innovation board mainly targets emerging industries considered strategically important, including high-tech equipment manufacturing, new energy, biotechnology, big data and cloud computing.
Many of these sensitive industries, such as network information security, are not allowed to receive foreign capital or list overseas, meaning a domestic funding alternative is especially important.
The market sees the new Nasdaq-style startup board in Shanghai as a move by Beijing to step up support for Chinese tech firms, and encourage innovation, to mitigate the negative impact of the Sino-US trade war on the nation’s “Made in China 2025” initiative, whose goal is to break China’s reliance on foreign technology and pull its hi-tech industries up to Western levels.
Suggesting a lower listing threshold, the new board will make more appropriate and differentiated arrangements regarding companies’ profitability and shareholding structures, and will be more inclusive toward innovators, according to the Shanghai Stock Exchange, meaning that pre-profit companies will also be allowed to list.
In addition, a registration-based system is introduced in the new board, limiting official powers to control the timing of listings.
Reuters noted that the registration-based IPO system of the new board would give market forces a dominant role in deciding when a company can sell shares publicly, removing regulatory hurdles facing many Chinese listing candidates.
Small investors are encouraged to invest in the technology innovation board via mutual funds, so that they can share growth of innovative companies.
Last November, the state-owned China Securities Journal reported that around 20 Chinese firms hope to list on the new board.
Earlier this year, authorities launched Chinese Depositary Receipts (CDRs), as a way to entice overseas-listed Chinese tech giants, such as e-commerce giant Alibaba and social media behemoth Tencent Holdings (00700.HK), to list domestically.
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