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Focus Media to list domestically
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FOCUS Media Holding Ltd, an outdoor advertising display company that delisted in the US two years ago, has received regulatory approval for its plan to list in domestic exchange through a reverse merger.
Under the plan, Focus media will be bought out by Hedy Holding Co, a Shenzhen-listed manufacturer of computers and electronic equipment, in a deal worth 45.7 billion yuan (US$7.2 billion).
The plan has been approved by China Securities Regulatory Commission, Hedy said in a securities filing today. Shares of Hedy jumped by the daily limit of 10 percent today after trading was resumed from a one-week suspension.
Focus Media’s relisting rout has set a precedent for US-listed Chinese companies that are seeking to go private and relist in domestic market, industry experts said.
“In the case of Focus Media, it took a little more than one month to gain the approval, indicating a favourable regulatory environment for the return of overseas listings,” Tian Lai, financial consultant of the investment bank department of Huatai Securities who took part in the Focus Media case, told the Shanghai International Private Equity Forum today.
Driven by rising valuations on domestic bourses, dozens of Chinese companies listed on exchanges in the US are looking to be taken private and realist home. So far this year, 26 companies have unveiled privatisation plans, compared with a total of 40 companies delisted from the US exchanges between 2011 and 2015.
“The privatization wave also comes under pressure from short sellers and sometimes the difficulties for foreign investors to understand business models that are unique for Chinese market,” Cai Hongjun, chairman and head of China investment banking at Citigroup Inc, told the forum.
Cai noted that companies considering privatisation should be cautious as re-listing spends time and costs and involves uncertainties.
“The unreasonably high valuation in domestic market is unlikely to sustain,” Cai said.
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