Despite a lukewarm initial public offering (IPO) market in 2010, China-based companies have continued to tap investors from outside China and list on foreign stock exchanges. In the US alone, there have been 16 IPOs by China-based companies raising an aggregate of over $1.1 billion dollars so far in 2010. While this deal activity is encouraging, even more compelling is the fact that Chinese companies have continued to access the US and other overseas markets despite challenging regulatory circumstances in China.
As many IFLR readers will know, virtually all of the public offerings in the US by China-based issuers involve offshore special purpose vehicles (SPVs) that act as holding companies for the issuer's China-based operations. Not long ago, when China's cross-border M&A rules, also known as Circular 10, took effect in 2006, market participants feared that the use of SPVs for overseas listings would come to an end. Circular...