PRZOOM - /newswire/ -
Shenzhen, Guangdong, China, 2010/12/08 - China First Capital's report is first with detailed analysis specifically for Chinese entrepreneurs, to lower risks and improve the success rate of IPO.
China is now the world's largest and most active IPO market in the world. For Chinese entrepreneurs, there has never been a better time to become a publicly-traded company. China First Capital has just published the first comprehensive research report on IPO markets for China SME in China and abroad. The report analyzes advantages and disadvantages for Chinese Small and Medium Enterprises (SME) of IPO in China, Hong Kong, USA and other stock markets. It can be downloaded from CFC website.
"Our report is for Chinese entrepreneurs, to give them the facts, perspective and tools to make the best choice of where to IPO", explains CFC Chairman Peter Fuhrman. "For most entrepreneurs, deciding where and when to IPO will be the biggest decision they ever make for their business. We understand this, and based on our work as investment bankers to many of China's leading SME, we want this report to help make the IPO decision-making process more fact-based, more successful for entrepreneurs."
CFC is one of the leading specialist investment banks and advisory companies. Its clients are exclusively Chinese SME. CFC assists these companies with pre-IPO private equity capital, M&A and capital markets advisory. Its business is built on deep understanding of Chinese SME challenges and opportunities.
According to the CFC research report, there are three key differences between a domestic or offshore IPO (principally on Hong Kong or US Stock Exchanges) for Chinese SME. They are:
1. Valuation, p/e multiples
2. IPO approval process C cost and timing of planning an IPO
3. Accounting and tax rules.
"At first look, most SME bosses will think a domestic IPO on the Shanghai or Shenzhen Stock Exchanges is always better, because p/e multiples in China are much higher," Fuhrman explains. "But, stock market valuations and regulations are continuously changing. It can take three years or more for many Chinese companies to complete the approval process for a domestic IPO. Will ChiNext valuations still be much higher in three years? It's impossible to predict. So, the IPO decision should be based on assessing the important facts about IPO markets, starting with the differences in investor behavior, disclosure rules, legal liability."
One trend is very clear, according to China First Capital. Most Chinese SME will have a better chance of a successful IPO if they have private equity investment before the IPO. The transition to a publicly-listed company is complex, with significant risks. A PE investor can help guide an SME through this process, lowering the risks and costs in an IPO.
"An IPO is a financing method, and is usually the lowest-cost way for a private business to raise capital for expansion," confirms Fuhrman. "An entrepreneur needs to be smart about how to use capital markets most efficiently, for the purposes of building a bigger and better company."