Gem Registration System Opens Investment Bank Multi-Channel Reserve Pricing Underwriting Talent System Shuffle On The Way

The sudden opening of the gem registration system is bringing greater changes to the investment banking business.

In twenty-first Century, the business reporter was informed that before the news of the registration system reform of the gem began to fall, many investment bank teams were still preparing projects according to the existing gem framework. Under the new caliber, the changes in the way of reporting and auditing also had a new impact on the exhibition industry.

According to a number of investment bankers, judging from the current auditing standards for the release of gem, some of the issuers who had been forced to withdraw materials in the sprint board were expected to usher in a new IPO opportunity. At present, the target of the gem's potential projects may include three main categories: one is the withdrawal of applications from the main board and the Science Board, the two is the potential projects with overseas listing intention, and the three is the gem project normally promoted.

Although the new indicators under the registration system reform are expected to enhance the inclusion of the listing system, it also brings new challenges to competition among investment banks. In the view of the industry, future investment banks will face more difficult trials in terms of issuance, pricing and underwriting. The professional degree of these links will also have a direct impact on the future contract business. It is estimated that the professional demand level of the investment banking team will be further improved, and the existing investment Bank team structure may also be shuffled.

The sudden opening of the gem registration system is bringing greater changes to the investment banking business. - Gan Jun photo

Investment banks focus on research

In April 27th, the Central Committee of the comprehensive Deepening Reform Commission held its thirteenth meeting to consider and adopt the "gem reform and the overall implementation plan of the pilot registration system". At the same time, the SFC and the Shenzhen Stock Exchange issued a set of supporting rules related to the registration system reform of gem.

In twenty-first Century, the economic news reporter learned that many investment bankers were surprised at the landing of the policy at that time point.

"The main line of this year's IPO reform is more of the creation of the new third board selection layer. The reform itself will increase the supply of new market shares. If we start the reform of the gem at the same time, there will be some pressure on the market, and the difficulty of controlling the pace of reform will also increase." A Beijing listed brokerage investment bank said.

After the disclosure of the relevant requirements of the gem registration system, many brokerage firms also launched research and learning on this issue.

"Although it is expected that the gem will start reform, I did not expect it to be so early, and the leaders began to organize everyone to learn the relevant framework of the registration system reform of the gem." The investment bankers said, "it is of two significance to study this framework urgently. First, we should find out the threshold of listing and more accurately screen and communicate potential IPO projects ahead of time. Two, we can make PPT timely and give customers a reference."

Reporters noted that the CIC, CITIC and other leading brokerage firms in the investment banking industry formed the interpretation and display documents of the gem registration system on the following day in April 27th, and carried out a comprehensive reading of the registration system reform system, issuance underwriting, Listing Supervision and trading.

Some investment bankers believe that at present, many brokers' opinions on GEM registration system are more focused on research and learning stage, but with the gradual landing of rules and communication with regulatory authorities, a contract competition around gem projects will soon be opened.

"Because the news is relatively sudden, so it is still learning, but from some of the requirements, many companies with difficulties in listing have the opportunity to become issuers." A broker from Shanghai investment bank said, "the first time I got the news of reform, I sent a better IPO client, and the customers were watching and studying."

Multiple channels

On the basis of policy research, investment banking teams are competing for potential gem resources.

In twenty-first Century, the economic report reporters learned from the multi party information that at present, the investment bank team believes that the potential projects of the gem come from three fields. One is the project of "retiring" from the pre nuclear quasi system or the science and innovation board channel; the two is that it originally had the intention to list abroad, but considered the items listed on the A share; and the three is the existing gem project.

"Some enterprises that do not conform to the requirements of the main board, or because of minor defects or disqualification of the plates, are likely to get the opportunity to go public under the reform of the gem." A chief executive of a brokerage firm in East China said, "before these projects have run a round of guidance and declaration, in fact, they have been well prepared for the IPO process, and at the same time, the company has a higher degree of standardization."

In fact, quite a few companies are running away from the science and technology board, and have turned to the gem. For example, papaya mobile which failed to realize the listing of science and technology board last year appeared in the guidance information of Beijing Securities Regulatory Bureau in February 28th this year, and decided to regard gem as a new target of listing. In addition, China and Thailand jointly sponsored China Alliance data is also about to decide to sprint gem.

Some investment bankers also pointed out that the big bay area of Guangdong, Hongkong and Macau is also expected to become a potential area for mining gem. The reason is that the participation of companies from Shenzhen and other regions is relatively limited in the process of creating the science and technology board, and some companies are probably waiting for the opportunity of the gem reform.

"In fact, there are a lot of Companies in Shenzhen, but local companies also want them to stay in the Shenzhen Stock Exchange, so they are also waiting for the reform opportunities of the gem. An investment bank in Shenzhen said, "in fact, some companies were not inconsistent with the establishment of the science and technology board, but the issuers would have some geopolitical considerations such as Shenzhen's local resources."

In fact, from the geographical distribution of Shenzhen Chuang Chuang company, the proportion of enterprises from Shenzhen has a certain gap with the market.

Wind data show that in the current 100 listed companies, the number of companies from Beijing is up to 17, and Shanghai has 16 companies, compared with only 9 from Shenzhen.

"If the gem registration reform is pushed forward, we will probably see more companies from Shenzhen's local enterprises and even the Guangdong, Hongkong and Macau enterprises." The investment bankers pointed out.

At the same time, in recent years, because of the "lucky luck" coffee incident, the stock market in China has been more skepticism in the US stock market, leading to a lot of uncertainty about the issuers of overseas listing, and these projects are also regarded as potential contract resources by some investment banks.

"Some projects with overseas listing plans may also become companies that are suitable for the listing of GEM companies. On the one hand, they should be tolerant to unprofitable enterprises. On the other hand, even if some issuers have made offshore structures, there is still possibility of listing in the reform of registration system." Shenzhen investment bankers said.

In addition, some investment bankers pointed out that the impact of registration system reform is relatively limited for those companies that are already preparing for the gem listing.

"We sort out the current projects, from the perspective of access threshold, there is no problem." The above East China Securities brokerage investment bank said.

New challenges for underwriting

For investment banks, the full start of IPO is not entirely an opportunity.

If Chuang Chuang board can get a relatively high valuation premium from the "new things" factor, then the gem and selection layer may aggravate the valuation differentiation among different enterprises.

In the industry's view, in the past, the main board and the gem adopted a 23 price earnings ratio pricing strategy, while the science and technology board benefited from the high valuation effect. Therefore, the underwriting pressure faced by the investment bank in carrying out the IPO project is not large.

But at the moment of the reform of multi line and the overvaluation expected to cool down, the investment team's sales ability will bring more specific tests.

"Previously, the valuation of Chuang Chuang board was high because the theme was new, while the target was relatively scarce, and the circulation was limited, and there was a potential endorsement of capital market reform project No. 1". The above Shenzhen investment bankers said, "but the registration system reform of gem is the stock reform, and the possibility of a substantial premium is decreasing. This will bring a sharp rise in the challenge of investment bank's underwriting pricing."

"The reform of the selection layer is also in progress, and the reform of the gem will follow. The money in the market is still there. The long-term capital market also needs a process, which will lead to a certain pressure on the market valuation center, and even some issuers' market price will encounter resistance." The head of investment banking in East China said, "this will be a result of more marketization, that is, a good company may have a high price, while a general company is relatively cheap. At the same time, the investment ability and sales resources of investment banks are also crucial."

In its view, unlike previous investment lines, too much emphasis on project contracting, with the start of the registration system reform, the investment bank's attention to the underwriting team will further improve.

"In a specific price range, or when the market is facing downside risks, the investment team can not have the corresponding underwriting capability. Whether the capital market department has sufficient resources and recommendation effect is needed to be observed." The official said, "in strict sense, the A share market has been affected by the immature system. The underwriting section of the investment bank has not yet formed a case for reference, and it has not undergone very strict market tests."

"In the past, investment banks attached too much importance to contract work, and even encouraged excessive incentives to hire more talents. In fact, this situation may usher in a shuffle, and the emphasis on pricing and underwriting capabilities will be further enhanced." The above official said, "at the same time, the effect of underwriting will also affect the contract, because the price you send is high, and there will be more issuers willing to make you a project."

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