Signup below to receive email updates on upcoming speaking engagements and when new articles are posted.
INVESTMENT BANKING ADVISORY
China Debuts on International Capital Markets
The Chinese government sought to accomplish the first listing of a state-owned enterprise on both the Hong Kong and New York stock exchanges, enabling it to access international capital markets.
China had not previously completed an international listing for one of its companies. Success was critical, and virtually everything from the structure of the company to the regulation of the capital markets had to be created from scratch. In addition, government officials and company managers did not understand the mindset of international investors nor how shares would be valued and their performance evaluated. Since this was to be the first global offering of a Chinese issuer and the transaction would set a precedent for all future issuances, the government believed it was critical to succeed in all respects.
At the outset, no precedent existed in China for structuring a corporation according to western practices. Our clients' existing structure comprised a variety of related services as well as its primary services. Prior to restructuring, the company contained such entities as a police force, hospitals, restaurants and employee housing, etc. Our principals worked with government officials and company managers to identify those core assets that should be retained in the listed entity and those that should be transferred to another government-owned entity.
The management and evaluation of the company as a state owned enterprise was substantially different than the way the company would be viewed by international investors. We helped company executives understand and analyze how their past performance would be evaluated by the market and worked with them to devise a financial strategy for the future. We also helped them develop and communicate their story to the international investment community. Further, we educated the government and the company about corporate governance procedures and expectations in the international market.
We explained international market practices and regulations to Chinese government officials and used those practices as a basis for helping our clients to devise new regulations. We also worked with the HKSE and NYSE authorities to coordinate listing and trading procedures, ultimately creating the template for all future joint listings of Chinese companies.
Marketing and Investor Education
We conducted an extensive marketing program to educate Asian, U.S. and European investors about opportunities in China. Just as the Chinese did not understand the practices of the western investors, the western investors were completely unaccustomed to analyzing and understanding the risks and rewards of investing in China. The successful completion of this deal opened the door to the international markets for Chinese issuers.