Chinese Company Abandons GDR Plan as Listing Rules Tighten
Bethel Automotive Safety Systems Co (603596.SS), a Shanghai-listed automotive braking system manufacturer, has decided to scrap its plan to issue Global Depository Receipts (GDR). The company cited changes in domestic and overseas capital market conditions, following the tightening of GDR listing rules by China’s securities regulator.
The new GDR rules, implemented last month, impose restrictions on the use of proceeds and subject issuances to national security reviews. These changes could potentially dampen the interest of Chinese companies in pursuing listings in Europe, according to bankers.
Bethel had initially planned to issue up to 61.8 million shares on the SIX Swiss Exchange. However, after careful consideration of its financial and operational situations, the company has decided to terminate the GDR plan. In a statement to the exchange, Bethel mentioned that the termination would not significantly impact its production, operation, and sustainable development.
This development follows the cancellation of a proposed Swiss GDR offering plan by Jiangsu Yuyue Medical Equipment & Supply Co (002223.SZ), a Shenzhen-listed medical devices maker, earlier this month. Similar to Bethel, Jiangsu Yuyue cited changes in market conditions as the reason for abandoning its GDR plan.
Over the past year, more than a dozen Chinese companies sought listings in Zurich and London through GDRs as a means to explore alternate overseas fundraising options amidst escalating tensions between China and the United States.
The tightening of listing rules and the withdrawal of Chinese companies from GDR plans reflect the evolving dynamics of the global capital markets and the impact of regulatory changes on cross-border listings.
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