Chinese Firms flock to Switzerland for Fundraising
Swiss capital is becoming a popular choice among Chinese companies for raising funds.
Chinese companies are increasingly turning to Switzerland to raise capital, after not being listed in the US due to geopolitical tensions, and due to stricter auditing standards in the UK.
According to banking and exchange executives, dozens of Chinese companies are looking to use the “stock-link” connection between the Shanghai and Shenzhen stock exchanges with the Swiss market. Last year, nine Chinese companies listed in Zurich, raising $3.2 billion in the European country, far exceeding the $470 million they raised in New York. There have been five successful companies listed on the Swiss market in 2022 alone.
ph: SIX
The “stock-link” program is modeled on a similar scheme in London, which allows companies listed in one location to raise capital in another. Chinese companies are eyeing this platform in the UK as well, with five successful issuers raising around $6.5 billion USD through the London Stock Exchange’s Stock Connect program since its launch in 2019. However, the UK's audit regulator, the Financial Reporting Council, has ruled that China's auditing standards are not equivalent to international standards, which has pushed companies to Switzerland.
Switzerland’s appeal to Chinese companies is not just limited to its more relaxed auditing standards. Listing abroad also makes it easier for Chinese companies to bypass tough capital controls at home, something that has become increasingly important as China’s regulatory environment has become more complicated in recent years. Additionally, Swiss depository receipts allow Chinese companies to list without the expense, time and complexity of a full IPO.
The only company to list on the Swiss market this year is lithium battery equipment maker Zhejiang HangKe Technology Incorporated Co, which raised $172 million. Other Chinese companies hoping to list in Switzerland include Yongtai chemicals and manufacturing group Lingyi iTech. Swiss banking officials are hopeful that more Chinese companies will follow suit, as the demand for Swiss depository receipts continues to grow along with the number of Chinese companies looking to list overseas.
It remains to be seen if Switzerland will continue to be the destination of choice for Chinese firms looking to list abroad, but for now, it appears to be the best option.
Chinese Firms flock to Switzerland for Fundraising
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