Chinese IPOs face Nasdaq clamp

Business | Reuters and Avery Chen 10 Oct 2019

Nasdaq is tightening restrictions on initial public offerings by small Chinese companies and slowing down approvals, including requiring that part of the capital be raised from American investors and having Americans on the board of directors, mainland media reported.

Nasdaq's attempt to limit these stock market flotations comes as a growing number of them end up raising most of the capital in their IPOs from Chinese sources, rather than from US investors.

The mainland media said some of these small firms are rethinking their launching of IPOs on the New York Stock Exchange.

Meanwhile, Goldman Sachs said yesterday it was reviewing its involvement in Megvii Technology's planned initial public offering after the US government placed the Chinese artificial intelligence firm on a human rights blacklist.

In an emailed statement in response to a request for comment on the Alibaba-backed Megvii IPO, Goldman said it was "evaluating in light of the recent developments."

Megvii Technology's listing was scheduled for Hong Kong in the fourth quarter and might raise as much as US$1 billion (HK$7.8 billion), according to sources.

Known for its facial recognition platform Face++, Megvii will become the first Chinese AI firm to go public if the deal goes ahead.

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