London bourse bids to lure Chinese listings

London Stock Exchange Plc is hoping to welcome a fresh wave of Chinese listings as it ramps up efforts to lure companies from the Middle Kingdom.

Expectations were raised in February when Suzhou Weibao Investment Co Ltd announced plans to float on the bourse's main board within six months, which analysts say could act as an anchor for Chinese listings.

"It's not often a Chinese firm lists on the main board," says A.K.M. Ismail, CEO of Avalon Enterprises Ltd, a Singaporean consultancy that helps clients list in London. "I hope Weibao Investment will be an exemplary listing (and) help to build investors' trust in Chinese firms."

London's main board currently has only 44 companies from China. The rest are listed on its junior Alternative Investment Market.

Weibao Investment, which is based in the eastern province of Jiangsu, makes healthcare products using advanced biotechnology. Along with the listing, the company also plans to open units for production and research and development in the UK. "The London listing will help us build a reputation as an international brand," Shao Chen, its founder and chairman, said in February.

The London exchange has been working to raise its profile among Chinese companies since 2014, taking its first promotional roadshows to Beijing and Hong Kong.

In November last year, the exchange held a conference to attract more listings from China that featured high-profile speakers such as Ma Jun, chief economist for the People's Bank of China.

Nikhil Rathi, CEO of the bourse, says his team is committed to "building a vibrant international market in London for Chinese equity and debt funding".

The stock exchange is also doing a feasibility study on a potential stock connect between London and Shanghai. A report is expected soon, although no time frame has been announced.

Analysts say such a connect would give London investors valuable access to the Chinese stock market, which is currently limited by the nation's capital controls. Shanghai is already connected to the Hong Kong Stock Exchange.

"With London being a major source of international funds, and China growing so quickly, it makes sense that the LSE would like to grasp the opportunity," says John McLean, nonexecutive chairman of two Chinese companies on London's AIM.

His view represents that of many industry insiders, who hope fresh initiatives and developments can improve the image of Chinese companies, which has been hurt by questionable actions by some firms in the past.

In 2007, Chinese lottery operator Betex delisted from the AIM after Chinese police detained two senior employees for illegal gambling. The next year, the CEO and majority shareholder of Chinese cellphone handset maker ZTC disappeared after he used shares in the company as collateral for a loan.

Chinese enterprises still trading on the London exchange are hopeful that their steady, sustainable performance since then can win over investors.

"We just have to keep on generating positive revenue and persuade investors that our firm will bring growth for their capital in the long term," says Li Xianzhi, CEO of Aquatic Foods Group, which is listed on the AIM.

David Facey, a partner in SP Angel Corporate Finance, agrees. His company acts as nominated adviser - intermediaries that are required to regulate AIM-listed firms on behalf of LSE Plc - to Aquatic Foods Group. He says his team continues to receive calls from Chinese companies interested in listing, but previous failures have affected investors' appetites.

"We believe only time will change people's opinion, as Chinese companies still on the market continue to perform" and deliver on their promises, such as paying dividends, implementing good corporate governance and keeping the market informed, Facey adds.

cecily.liu@mail.chinadailyuk.com

(China Daily Africa Weekly 03/11/2016 page24)