- Nasdaq stock exchange will reportedly introduce new IPO restrictions to prevent smaller Chinese firms from getting listed.
- The new rules may set out a minimum value on the size of IPOs for the first time on Nasdaq.
- Existing crypto firms like Bitmain and Ebang applying for IPOs are planning to raise more than $100 million.
Nasdaq stock exchange will soon introduce new restrictions on initial public offerings (IPO) to prevent smaller Chinese firms from getting listed, as per a Reuters report.
Chinese IPO seekers tend to lack accounting transparency and have “close ties to powerful insiders,” according to anonymous sources cited by Reuters. As a result, the new rules will reportedly set out a minimum value on the size of IPOs for the first time on Nasdaq. The exchange might require firms “from some countries, including China” to raise at least $25 million in their offering or at least a quarter of their post-listing market capitalization.
Reuters data reveals that out of 155 Chinese firms that have gone public via Nasdaq since 2000, 40 grossed IPO proceeds fall short of $25 million. Although the current applicants (like Bitmain and Ebang) are planning to raise at least $100 million, the projected changes are still expected to scrutinize all Chinese applicants.
In particular, Chinese firms that are yet to be listed will have to ensure that their international franchises comply with “global standards.” According to Reuters, Nasdaq will also examine the auditing of small US firms that audit the accounts of Chinese IPO firms.
In November 2019, Canaan Creative (BTC mining firm) became the first China-based company to go public in the US after failing to secure an IPO in Hong Kong. Despite losing its biggest bank, Credit Suisse, Canaan raised $90 million. The firm had initially planned to raise $400 million.
Chinese blockchain company OneConnect also completed its IPO towards the end of 2019. The firm raised $347.2 million in a New York Stock Exchange offering. Around the same time, crypto hardware producer, Bitmain, also applied for an IPO with the US Securities and Exchange Commission (SEC).
Last month, major mining chip manufacturer Ebang filed for a $100 million IPO in the US. The firm said it plans to list on either Nasdaq Global Market or the NYSE under the ticker EBON.
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