Overseas Strategy Of "Money Making": Sharpen The Knife Without Cutting The Chopsticks.

How do companies operate the listing?

Are the 2 big plates in the sea and the 5 big plates in the east bright or bright in the west?

The intermediary must be professional and strong. It is influenced by various factors. For most domestic enterprises, listing in China often means a long waiting process.

Therefore, the overseas market has become another paradise for these enterprises to achieve the ideal of listing.

According to incomplete statistics, only in the first half of this year, there were more than 30 Mainland enterprises going to the US, Hongkong and Singapore.

However, for more domestic enterprises, financing overseas markets still seems to be a dream far away.

As a listed company, it usually needs to deal with all aspects of the securities and Futures Commission, exchanges, investors, media and other aspects, such as legal, financial, public relations and so on. Therefore, it is necessary to select some professional and powerful intermediaries (including sponsors, lawyers, accountants, appraisers, public relations companies, etc.).

"Intermediaries are the key to listing."

The executive director of Beijing Huashan one corporate finance Co., Ltd, described the importance of intermediary agencies.

He also suggested that sponsors should be based on experience and fame rather than price as the sole criterion for employing intermediary agencies.

The underwriter's position is undoubtedly the most important among all the intermediaries in the six index of the Underwriters' strength.

"If possible, we should try to hire the first tier underwriters like Merrill Lynch, Morgan and Stanley," he said.

It is then supplemented by other Underwriters who specializes in certain industries. "

Su Shaowen, managing director of Beijing Qing Ke Information Consulting Co. Ltd.

In addition to the main underwriters, the listed companies often need to hire an underwriter, but usually the underwriters are not as well-known as the underwriters of the first tier.

In this regard, some experts pointed out that the strength and qualifications of underwriters should be inspected from the following six aspects: 1, interest in the company's business.

Usually there will be many other underwriter business after initial public offering, so finding a long-term underwriter can save a lot of money for the future.

2, underwriting experience.

The Underwriters chosen by the company should not only have rich experience in business, but also have experience in accepting the size and type of distribution of similar companies.

3, familiar with the industry of the listed company.

4, distribution capabilities.

The ability of underwriters to distribute shares and select the best investors will affect the success of stock issuance and subsequent market performance.

5, market making ability.

After the issuance of shares, the volume and activity of trading volume have an important impact on the company's financial position.

If a company publicly issues shares on the Nasdaq stock market, its underwriter must become a market maker and actively participate in the company's stock trading.

6, research ability.

After looking for a low-cost registered place to search overseas, after deciding the relevant intermediary agencies, the listed domestic enterprises usually need to register a holding company overseas to facilitate overseas listing and other capital operations.

The mainland's shareholders can be the main shareholders of Offshore Holding Company, and can produce 20% to 30% of the shares to attract overseas investors, and change the mainland companies to Offshore Holding Company affiliates. Of course, this process must also comply with the legal provisions of foreign investment in the mainland.

"In fact, the listed companies in the future will be registered overseas holding companies, in order to bypass domestic regulatory agencies, otherwise the relevant approval procedures will be rather cumbersome."

Su Shaowen said this analysis.

Overseas registration sites usually choose low cost areas such as Bermuda or Cayman Islands.

Two: choosing the listing place of the listing place is directly related to the cost and cost of domestic enterprises' overseas financing, and even affects the success or failure of the whole overseas listing activities.

At present, the main locations for mainland enterprises to list overseas are the New York stock exchange, NASDAQ Exchange, Hongkong stock exchange and Singapore. Different countries or regional exchanges have different requirements for listing and regulatory requirements. Choosing overseas listing sites should not only be based on the development strategy of their own characteristics, but also consider the factors such as time to market, amount of financing, follow-up financing, investor structure and equity incentive system, etc., and analyze the conditions and environment of the listing itself, and compare the market access conditions of the various exchanges.

According to the cost of listing, the cost of issuing overseas shares mainly includes listing fees, lawyer fees, auditor fees, financial adviser fees, underwriter fees and other printing application fees.

In the United States, the first public offering of IPO, the entire procedural process plus the previous negotiations and roadshows is roughly 1 years, and the cost is more expensive, with an average cost of about $1 million 500 thousand.

As the US investment banks currently entering China are mostly the first tier members of Merrill Lynch, Morgan and Stanley, it is very difficult for medium sized Chinese enterprises to choose the size of their enterprises.

Generally speaking, the whole process of IPO in Hongkong takes about 7 months, but due to the irregular operation of some private enterprises in the past (such as Eurasian agriculture, Green, Cole, etc.), the stock exchange has strengthened the prudence of the examination and approval.

At the same time, there are too many mainland enterprises reporting Hongkong listing, which greatly prolongs the time and reduces the success rate.

The cost of initial listing of the main board in Hongkong is about 150 thousand to HK $650 thousand, and the cost of listing on GEM is about 100 thousand to HK $200 thousand. In addition, the total cost of sponsorship, underwriters' Commission and related financial laws and publicity and promotion is likely to exceed HK $10 million.

In terms of time cycle, Singapore's listing cycle is shorter than that of the United States and Hongkong. In general, it can complete the whole process of IPO in 6 months, and the cost of financing is relatively low. The initial listing cost is about 6 million yuan.

Moreover, the re financing in the two tier market is only 2 to 4 weeks, and the cost is also much lower.

There are more than 3200 stocks listed on the New York stock exchange, including the most powerful Fortune 500 companies, such as IBM, GM and so on.

It can be seen that the New York exchange is mainly oriented towards the development of large enterprises with good performance, so the listing threshold is relatively high.

As a relatively low threshold, NASDAQ, because of its better market adaptability and more diversified participant structure, now has more shares of foreign companies listed on NASDAQ than the New York stock exchange and the stock exchange of the United States. It has become the main place for foreign companies to list in the United States and also the main destination for Chinese enterprises to list in the US.

As we all know, NASDAQ's reputation is closely related to the rise of Microsoft, Netscape and other high-tech companies. Therefore, it is generally believed that high-tech enterprises belonging to the Internet, computer hardware and software, telecommunications and other industries will be more eligible to be listed.

However, in fact, more than 50% of the Nasdaq market belongs to traditional industries, and the growth in the past 5 years is more reflected in more industries such as consumer goods, finance and utilities.

Therefore, the relatively correct definition is that NASDAQ is the home of growth firms.

However, NASDAQ has become increasingly unsuitable for being seen as a second tier market. A large proportion of its listed companies has exceeded the NYSE, and on the other hand, because of the high cost of listing, NASDAQ is no longer suitable for listed companies with less than $5 million in capital raising, because the listing cost of small companies is too expensive.

In contrast, the Singapore market is more suitable for manufacturing enterprises.

Currently, the number of companies listed in the Singapore market is much higher than that of manufacturing and hi-tech enterprises, especially in the foreign enterprises listed in Singapore. The proportion of manufacturing industry is over 50%.

The minimum listing requirements of the company are different from those of the overseas market for Chinese listed companies, but usually include three aspects.

The first is the financial situation, which usually stipulates the lowest profit standard and tangible net asset value of Listed Companies in the past years. The two is the business records, which usually require the principal enterprises of listed companies to have a business report of not less than three years, prepare financial reports audited by registered accountants in accordance with the accounting standards of listed countries or international accounting standards, and three is a certain amount of stock circulation.

The minimum listing requirements are usually quite different between different capital markets and between different levels of the same market, such as the main board and the gem.

More noteworthy is that in some international capital markets, there may be more than two minimum listing requirements, and only one of them can be satisfied.

In contrast, the basic listing conditions of the Hongkong gem market are much simpler, specifically: 1. will have two years of active business records, but there is no profit requirement; 2. must have centralized main business, and the comprehensive and investment companies are not allowed to be listed on the gem; the 3. lowest public stock is 10% or HK $30 million (the higher).

The listing requirements in Hongkong's main board market are much stricter. For example, the listed companies are required to make a profit of HK $50 million (up to HK $20 million in the latest year, HK $30 million in the previous two years), the minimum market value should be HK $100 million or above, and the minimum public holding amount is 25% (if the issuer's market value exceeds HK $4 billion, it can be reduced to 10%).

Three: the price should not be too high. With the help of the intermediaries, the listed companies will need to consider the issue of pricing after completing the relevant legal documents and audit reports.

"The issue price is discussed and determined by the company and the underwriters. It is confirmed that the board of directors will further confirm that it is a process of mutual communication between the two sides."

Beijing Qing Ke Information Consulting Co., Ltd. researcher Wang Wei said.

Because of this, in order to achieve the expected amount of financing, domestic enterprises tend to set the price too high, and the direct harm of this is the failure of issuing. In order to avoid such a situation, the Underwriters usually ask the enterprises to lower the pricing.

Once the two sides fail to reach an agreement, it is likely that the issue will be delayed or even forced to cancel.

In June 21st of 2004, Wuxi Hongkong Huarun Semiconductor Co., Ltd., which was originally listed in the stock market, issued a statement saying that it could not continue its global stock offering activities and stop issuing new shares because it could not agree on the final pricing with the underwriters.

A lawyer pointed out that overestimating the issue price is rooted in the fact that some domestic enterprises do not understand the difference between overseas listing and the mainland.

In the mainland of China, for a long time, new shares usually make investors earn money, so there is basically no problem of issuing failure.

But overseas markets are much more sensitive to prices than domestic ones.

In this regard, Su Shaowen analyzed that pricing is a complex and subjective process. Even a well-known underwriter, such as Goldman Sachs, may not get market recognition, and there are many pricing methods in accounting.

After determining a general price range, the final issuing price will be determined through the roadshow and the investor's subscription.

It should be pointed out that the listing price of a company in different markets may vary greatly, and the choice of different intermediaries will have an impact on pricing.

Four: crossing the legal barriers, the Chinese enterprises must abide by two legal norms when listing overseas. First, the relevant laws, regulations and policies of our country. Two, we must abide by the relevant laws and regulations of the listed countries and regions.

How to smoothly cross the legal barriers of different regions is very important in the process of listing overseas.

As a lawyer representing the 15% stake in Lenovo's replacement, Xiang Shaokun, chief executive of the Shanghai branch of Weijia law firm, the top five law firm, said: "the key step for Chinese enterprises to go overseas is to study, familiarity with and adapt to the legal obstacles between Mainland China and listed companies."

The overseas IPO of Chinese enterprises should first be approved by the China Securities Regulatory Commission and meet the following requirements: the listed companies must be Limited by Share Ltd that comply with the company law and the relevant laws and regulations governing overseas listing. The use of fund-raising must comply with relevant policies and regulations of our country; net assets should be no less than 60 million yuan RMB and have growth potential, and the amount of financing should be no less than 50 million US dollars; the enterprise has a standardized management structure and a complete management system, a stable senior management level and a higher management level; and the dividend payout after listing is in line with the reliable foreign exchange sources of the state's foreign exchange management regulations.

Xiang Shaokun thinks