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Chinese companies turn to Switzerland, Frankfurt to sell shares as regulatory woes make US market unappealing
- Longi Green Energy Technology has selected banks for a sale of global depository receipts in Switzerland worth up to US$4 billion
- Other names in the pipeline include Beijing United Information Technology and energy drink maker Eastroc Beverage Group
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Chinese companies are set to tap the European market at a faster pace next year as lingering geopolitical risks and regulatory woes reduce the appeal of other offshore markets like the US.
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Chinese solar power equipment company Longi Green Energy Technology has selected banks for a sale of global depository receipts in Switzerland that could be as large as US$4 billion, bigger than any offering in Hong Kong this year. Other names in the pipeline include e-commerce platform Beijing United Information Technology and energy drink maker Eastroc Beverage Group, Bloomberg News reported.
Chinese GDRs boomed this year following a recently-expanded programme between China and several European bourses that simplified the listing process, allowing faster offerings than in onshore exchanges or in Hong Kong. While liquidity is lower in Europe, investors may be keen to tap the listings as an arbitrage chance to mainland shares.
The GDRs become fungible with onshore shares after 120 days of trading. The GDRs are predominantly taken up by Chinese investors and most are waiting to convert them back to A-shares to pocket the price difference.
“We expect to see more GDR listings in the coming months with China emphasising offshore capital raising,” said Mandy Zhu, head of China, global banking at UBS in Hong Kong.
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