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China Fast-Tracks IPO Approval for Foxconn Unit

China Fast-Tracks IPO Approval for Foxconn Unit S1 AC506 0309fo G 20180309032950



SHANGHAI—A fledgling unit of Taiwanese electronics manufacturer Foxconn Technology Group jumped to the front of the queue of Chinese companies waiting to go public, showing how China is moving quickly to allow select technology stalwarts to list at home.

Foxconn Industrial Internet Co., a Shenzhen-based company that makes parts for smartphones and wireless equipment, on Thursday received approval from China’s securities regulator to launch an initial public offering that will raise at least 27.3 billion yuan (US$4.3 billion) on the Shanghai Stock Exchange.

The regulator’s approval came a little over a month after Foxconn Industrial filed its listing application, an unusually swift turnaround relative to the one- to two-year wait that most companies have to endure. It also stands in contrast with dozens of firms whose applications to go public were rejected in recent months after regulatory scrutiny of their reported profits and disclosures.

Foxconn Industrial was set up in March 2015 and is a subsidiary of Taiwan’s

Hon Hai Precision Industry
Co.


2317 2.80%

, one of the world’s largest electronics contract manufacturers, better known as Foxconn. The parent company in December said it was planning to list its unit in Shanghai, and Foxconn Industrial obtained clearance from China’s State Council before submitting its listing application to the China Securities Regulatory Commission.

The securities regulator typically requires companies to have a three-year profit record before they can list on the main boards of the Shanghai or Shenzhen stock exchanges. That has deterred some startup companies and led them to launch IPOs in Hong Kong or New York.

The fast-tracking of Foxconn Industrial’s IPO application shows how Beijing is giving “special treatment” to companies it considers strategically important, said

Shen Zhengyang,

an analyst at Northeast Securities. “China’s leadership wants to encourage so-called unicorn companies to list domestically,” he added, referring to companies with a valuation of more than $1 billion.

Foxconn Industrial plans to use funds raised from its IPO to invest in eight areas including cloud computing, 5G technology and smart manufacturing, according to its prospectus. The company’s net income last year rose by 10.5% from 2016 to 15.8 billion yuan, while revenue jumped 30% to 354.5 billion yuan.

China’s securities regulator recently said it is considering changing its listing rules to support so-called new-economy companies that are in technology and internet businesses.

It is also trying to get the country’s technology giants that are already listed abroad to pursue secondary listings domestically. Shares of companies such as

Tencent Holdings
Ltd.

and

Alibaba Group Holding
Ltd.

may be allowed to trade domestically via the issuance of Chinese depository receipts, The Wall Street Journal reported previously.


Source : WSJ

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