PRC websites prepare for IPO launches
June 18, 2010 | BY
clpstaff &clp articles &Foreign investors will not be able to take part in the shareholding reform that Chinese websites undergo as they prepare for their initial public offering…
Foreign investors will not be able to take part in the shareholding reform that Chinese websites undergo as they prepare for their initial public offering (IPO) launches on the domestic stock market.
“It's clearly difficult, if not impossible for foreign investors to be introduced,” said Philip Qu, a partner at the Beijing office of TransAsia Lawyers. “It would involve many regulatory and technical legal issues in addition to the general policies in relation to such news portals.”
The PRC media have recently been reporting that the government is actively pushing at least 10 Chinese media outlets to launch their IPOs. Active encouraging bodies include the China Securities Regulatory Commission (CSRC) and the State Council Information Office, which is in charge of online news activities. The accelerated drive by regulators comes on a second wave of ongoing media and culture industry reform.
“We've already seen A-share listing cases in the TV and print media sectors, which left state-owned Internet companies behind. Further, those overseas-listed and well-financed portal competitors like Sina or Tencent have grown rapidly and made this sector become even more competitive,” said Qu.
“This situation has led to some positive pressures and motivation to the reform of state-owned enterprise (SOE) news sites for better corporate governance and a broadened fundraising channel.”
Although the optimal shareholding structure between websites and other companies is largely consistent, Qu noted there could be one key difference. “In the process of reform and corporate restructuring, there might be restrictions on the shareholding structure, for example the state-owned majority, and the source of other funds,” he said. “For example, it's likely that strategic SOE investors will be preferred.”
Ten news portals are involved in a pilot restructuring program that is evolving them from the stodgy “iron rice bowl” corporate template – where SOEs guarantee lifetime employment – to a more free-market “modern enterprise system”. The websites include eastday.com, Qianlong.com, Xinhua News Agency, People's Daily and China Central Television. It was announced in Changsha at a symposium that the restructuring plans for people.com.cn and xinhuanet.com had been approved.
Shanghai site eastday.com had made several attempts in the past to be listed domestically. Analysts now expect it to be one of the first to list as it has completed its shareholding reform.
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