China may let Hong Kong-listed firms raise funds in Shenzhen via ‘H + A' IPOs
Unveiled on Tuesday by the Central Committee of the Communist Party and the State Council, the guidelines allow mainland companies with Hong Kong-listed shares (known as H shares), to issue A shares, or yuan-denominated shares, on the Shenzhen Stock Exchange – a reversal of the so-called A + H pathway that mainland-listed companies can use to add dual listings on the
Hong Kong exchange
The guidelines did not elaborate on which companies would be eligible for H + A listings or the required procedures.
The new opportunity would diversify fundraising options for businesses within the
Greater Bay Area , the economic region including Hong Kong, Macau and nine cities in Guangdong province, said Wilson Chan Fung-cheung, adjunct professor at City University. It would 'allow businesses within the [bay area] to raise new funds to expand their operations in mainland China, where their brands are more widely recognised', he said.
The dual-listing scenario could also tempt more businesses to seek listings in Hong Kong, as a single application could allow them to offer shares in both markets, said Kenny Ng Lai-yin, a strategist at Everbright Securities International in Hong Kong.
The new regime could exclude some listed companies, including
Tencent Holdings , that use a structure that disallows mainland listings. Many Chinese companies listed in the US and Hong Kong use the set-up, known as the variable interest entity structure, to circumvent Chinese restrictions that prohibit foreign investors from holding assets in certain sectors such as the internet and telecommunications.
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