According to the announcement of listed companies, as of April 28, a total of 94 companies have issued the “a-split-a” plan since the domestic listing rules of listed companies’ spin off subsidiaries were issued in December 2019. At present, 14 companies have successfully listed their spin off subsidiaries, with a total IPO fund-raising of 31.119 billion yuan.
On April 27, Shenzhen Gas Corporation Ltd(601139) announced that the management of the company had been authorized to start the preparatory work for the listing of the spin off subsidiary Swick on the gem of Shenzhen Stock Exchange.
With the gradual improvement of the spin off listing system, the heat of A-share spin off listing has increased, and some new changes have taken place this year. Three companies have issued restructuring and spin off listing plans. The experts interviewed believed that spin off listing has triple effects on enterprises, such as expanding financing channels, optimizing internal structure and improving governance efficiency. It is also one of the important means for listed companies to carry out asset restructuring, which will be promoted normally in the future.
spin off listing team continues to expand
3 companies choose to restructure and spin off
The reporter further combed and found that in addition to the above 14 companies that have been successfully listed, two subsidiaries have been registered and have not been issued, and one subsidiary has passed the development and examination meeting; The IPO audit of another 10 companies’ spin off subsidiaries is in progress.
“In recent years, the regulatory authorities have encouraged group enterprises to spin off their subsidiaries for listing, and there is a strong demand for group enterprises to expand financing channels and disperse risks. The cases of spin off and listing of A-share companies are gradually increasing.” Zheng Zhigang, Professor of finance at the school of Finance and finance of Renmin University of China, said in an interview with the Securities Daily that large companies may have many different businesses, and the development directions of different businesses are different. Conforming to the professional division of labor, optimizing and integrating the company’s industrial structure and strengthening the main business is an important consideration for spin off and listing. Finally, the development of some new businesses is often related to new technologies and Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) and urgently needs external equity financing support.
“In the past two years, with the gradual maturity of the market environment, the spin off listing system has been gradually improved, and the capacity of the spin off listing team has been continuously expanded.” Bank Of China Limited(601988) Research Institute postdoctoral Wang Huiqing told the reporter of Securities Daily that on the whole, the split listing alleviated the financing constraints of enterprise groups; While stripping non core businesses for the parent company, improving the internal governance efficiency of subsidiaries will help to improve the operating efficiency of enterprises; After the spin off and listing, the information transparency of subsidiaries is improved, which can effectively prevent the earnings manipulation of the management, so as to enhance the value of the enterprise group.
The reporter noted that in the recent cases of spin off and listing, there were three plans to restructure and list spin off subsidiaries China Energy Engineering Corporation Limited(601868) , Hengli Petrochemical Co.Ltd(600346) , China Communications Construction Company Limited(601800) 3 companies announced that their subsidiaries would be restructured and listed in the form of restructuring.
“The principle and effect of spin off reorganization listing and spin off IPO listing are the same. Both subsidiaries are listed independently, and the standards are basically the same, but the audit paths are different.” An investment banker from a securities firm told the reporter of Securities Daily.
“Spin off, reorganization and listing, in essence, is to re integrate the business of the parent company in order to optimize the allocation of enterprise resources. In theory, by classifying and stripping the business, the original management structure within the enterprise will be changed and the horizontal competition can be effectively reduced.” Wang Huiqing thinks.
“Spin off is also an important means of asset restructuring. The capital market encourages traditional companies to use the opportunity of listing to adjust their internal industrial structure and straighten out their ideas for future industrial development.” Zheng Zhigang said.
spin off entity with strong scientific and creative attributes
Beijing stock exchange
From the perspective of the split listing sector, most choose the gem and the science and innovation board. In addition, with the establishment of the Beijing stock exchange, some enterprises say they plan to split their subsidiaries and list on the Beijing stock exchange.
According to the reporter, among the 14 companies that have been successfully listed and 2 companies that have been registered (unlisted), including 7 on the science and innovation board, 8 on the gem and 1 on the main board of the Shanghai Stock Exchange. Excluding the termination of the spin off plan, of the 64 companies that are in the process of IPO registration review and announcing the spin off plan, 26 choose to spin off their subsidiaries to the gem, 9 plan to spin off to the science and innovation board, 6 and 2 plan to spin off to the main board of Shanghai and Shenzhen Stock Exchange and the Beijing stock exchange respectively, and the other 21 have not been clearly spin off the listing sector.
“Under the registration system, the division of labor within each sector of China’s capital market is different on the science and innovation board, the gem and the Beijing stock exchange, but there is also moderate competition to attract high-tech enterprises to list.” Zheng Zhigang said.
Wang Huiqing said that on the whole, the spin off and listing of A-share companies prefer the gem, mainly for two reasons. First, the gem focuses on the upgrading and innovation of traditional industries, which is in line with the division business scope of most listed companies; Second, unlike the scientific innovation board, which focuses on the attributes of scientific innovation, the gem does not make rigid provisions on the industry classification of listed enterprises, the proportion of scientific researchers and R & D investment. It only makes relevant requirements on the profitability of enterprises such as operating income, and the threshold for the spin off of subsidiaries is relatively low.
From the perspective of the industry of spin off subsidiaries, among the 14 listed companies, there are 3 special equipment manufacturing and pharmaceutical manufacturing, ranking the top, and 2 are computer, communication and other electronic equipment manufacturing. From the perspective of IPO companies to be audited, they are also emerging industries such as new energy, new materials, semiconductors and pharmaceuticals, with high scientific and technological content.
14 companies terminate the spin off plan
some enterprises turn to the new third board for listing
According to the reporter, up to now, a total of 14 companies have terminated the spin off and listing plan. From the perspective of termination reasons, most of them do not meet the conditions for spin off and listing, such as declining performance, horizontal competition, transfer of control of the parent company and high proportion of net profits of subsidiaries.
Beijing Forever Technology Co.Ltd(300365) terminated the spin off listing and said that the subsidiary Daoheng software plans to apply for listing on the new third board, which is conducive to strengthening its financing ability, improving share liquidity, enhancing operation and management level and brand influence, stabilizing and attracting excellent talents, improving the enterprise’s ability to resist risks and enhancing the enterprise’s development momentum.
“There may be problems in the audit of parent companies and subsidiaries, and there may be problems in the standardization of related party transactions. At the same time, there may be difficulties in the development of parent companies and subsidiaries. At the same time, there may be problems in the standardization of related party transactions. At the same time, it is also necessary to prevent the parent companies from being listed in the same industry.” Zheng Zhigang said.
“For enterprises, to successfully spin off and list, they need to realistically analyze their own business conditions, clarify their medium and long-term strategies, and make spin off decisions based on the objective needs of development. In addition, in the process of spin off and listing, they should pay attention to compliance review, unified planning and risk control.” Wang Huiqing believes that from the perspective of the market environment, the positive and steady promotion of the reform of the registration system, the continuous improvement of the rules and systems related to the spin off listing, and the promotion of the construction of multi-level capital market have a certain role in promoting the spin off listing of enterprises.
