As IPOs on the Shanghai and Shenzhen stock exchanges tighten, more and more companies are targeting the Beijing Stock Exchange. Brokerage China reporters combed through the data and found that the new share issuance rate of the Beijing Stock Exchange continued to rise, especially after the China Securities Regulatory Commission proposed to "tighten the IPO rhythm in stages" (referred to as the "827 New Deal") on August 27 last year. Among them, the average value of underwriting and sponsorship fees and audit and capital verification fees has increased significantly.
At the same time, regulators continue to speak out and consolidate the "gatekeeper" responsibilities of intermediaries. A person from a leading audit institution told a Chinese reporter that the audit quality and procedure implementation of IPO projects have been greatly improved, and any risk, regardless of size, must be strictly controlled.
The threshold for new shares on the Beijing Stock Exchange has been raised
On April 8, Wuxi Dingbang, sponsored by Soochow Securities, was listed on the Beijing Stock Exchange, rising 64.52% on the first day. According to the prospectus, Wuxi Dingbang's IPO issuance adopted an over-allotment option, that is, a "green shoe" mechanism. Without considering the over-allotment option, the total amount of funds raised was 155 million yuan, and the total issuance expenses were 15.5453 million yuan, with a rate of 10.03%, and in the case of the full exercise of the over-allotment option, the total amount of funds raised was 178 million yuan, and the issuance expenses increased by 1.5411 million yuan, and the rate was reduced to 9.59%.
Among the new shares issued by the Beijing Stock Exchange this year, Wuxi Dingbang's issuance fee can be called the most "cheap". Wind shows that since the beginning of September last year, a total of 30 new shares have been listed on the Beijing Stock Exchange, with an average issuance fee of 13.08% and a median value of 13.92%. In the same period last year (September 1, 2022 to April 7, 2023), a total of 81 new shares were listed on the Beijing Stock Exchange, with an average issuance fee of 11.84% and a median of 11.55%.
Since the "827 New Deal", it has been more than 7 months, and we can roughly use the data from the beginning of January to the end of August 2023 to see the month-on-month change in the issuance rate. According to the data, before the implementation of the "827 New Deal", the Beijing Stock Exchange has issued 54 new shares in 2023, with an average issuance rate of 12.08% and a median value of 11.73%.
Going back further, in the whole year of 2022, a total of 83 stocks were listed on the Beijing Stock Exchange, with an average of 20 stocks per quarter, with an average issuance fee of 11.41% and a median rate of 11.31%.
Since the beginning of this year, a total of 7 new shares have been issued and listed on the Beijing Stock Exchange, raising a total of 1.372 billion yuan and a total of 167 million yuan in issuance expenses. The average issuance fee of these 7 IPOs was 13.51%, and the median issuance fee was 12.86%. Compared with 2022, the average and median issuance rates have increased significantly. Industry insiders pointed out that the rise in fees shows that investment banks are gradually breaking the traditional programmatic operations and paying more attention to substantive practice, which further increases the requirements for companies to be listed, and the listing threshold has increased.
The practice of intermediaries places more emphasis on risk control
It is understood that the issuance costs mainly include intermediary fees, information disclosure and other promotion auxiliary fees, and exchange fees. Among them, intermediary fees are the lion's share. According to the role and contribution, the proportion of intermediary fees in the entire issuance and listing costs is the underwriting and sponsorship fees of securities firms, the audit fees of accountants, and the fees of lawyers.
Wind shows that the 30 new stocks listed since the "827 New Deal" of the Beijing Stock Exchange mentioned above are sponsored by 23 brokerages. In terms of the number of projects, China Securities Construction Investment has the most, with a total of 3, followed by Essence Securities, Minsheng Securities, Soochow Securities, Guotai Junan Securities, and First Venture, all with 2. Although some securities firms failed to act as sponsors, they "shared" in the form of joint underwriters, such as Yongxing Securities and Nanjing Securities.
In terms of audit institutions, Lixin Certified Public Accountants (Special General Partnership) has participated in the most projects, with a total of 8. Tianjian Certified Public Accountants (Special General Partnership) and Baker Tilly International Accounting Firm (Special General Partnership) followed suit, both of which participated in 4 IPO projects.
It should be pointed out that while intermediaries enjoy the market cake of the Beijing Stock Exchange, the supervision also puts forward higher requirements for their practice ability. On March 15 this year, the China Securities Regulatory Commission issued four documents of "two strong and two strict", among which the "Opinions on Strictly Controlling the Access to Issuance and Listing to Improve the Quality of Listed Companies from the Source (Trial)" emphasized that intermediaries should start from the interests of investors, improve internal decision-making and responsibility mechanisms, be professional, diligent and responsible, and sponsor institutions should be guided by investability to practice and develop their business.
Another audit institution, who did not want to be named, mentioned that the current regulatory authorities are very strict in reviewing the reports and other materials issued by intermediaries, and will be accompanied by a series of penalties, and some projects will even be retrospectively queried. Therefore, the firm currently strictly controls the risk control of IPO projects, and the audit procedures implemented by the project team, the audit evidence collected, and the inspection of the rationality of the overall business will be more complete and comprehensive. To put it simply, some major IPO projects will generally be executed in accordance with standards that can cope with on-site inspections.
The proportion of audit and verification fees has been further increased
In the view of many industry insiders, the increase in the cost of new shares on the Beijing Stock Exchange is also related to the current increase in the practice requirements of intermediaries. Supervision has taken multiple measures at the same time, and continued to consolidate the "gatekeeper" responsibilities of intermediaries, intermediaries have to bear more responsibilities, and the workload has also increased. In addition, it is also affected by supply and demand. Due to the contraction of IPOs on the Shanghai and Shenzhen stock exchanges and the narrowing of the listing channel, the Beijing Stock Exchange has become the choice of many companies, and the exchanges are tightening the review at the same time, making it more difficult to list.
The above-mentioned head audit institution told reporters that from the perspective of the projects they have been in contact with, the audit fee has indeed increased, but it is not obvious. Mainly because the audit fee is rolling, to be determined according to the length of service, very few companies can be successfully listed in three years, if the period is increased, there will be additional charges.
The reporter further combed the data and found that after the "827 New Deal", the average fundraising scale of IPO projects on the Beijing Stock Exchange has not changed much, but the average of underwriting sponsorship fees and audit and capital verification fees has increased, and the proportion of the latter in the issuance cost has also been further increased.
According to the data, since the "827 New Deal", the average underwriting and sponsorship fees of the 30 IPO projects issued and listed on the Beijing Stock Exchange are 16.9501 million yuan, accounting for 67% of the average issuance costs, and the average audit and capital verification fees are 4.7326 million yuan, accounting for 21% of the issuance costs.
On a year-on-year basis, the average underwriting and sponsorship fees of the 81 IPO projects issued and listed on the Beijing Stock Exchange were 15.3387 million yuan, accounting for 70% of the issuance costs, and the average audit and capital verification fees were 3.7436 million yuan, accounting for 18% of the issuance costs.
Will the issuance fees of the Beijing Stock Exchange continue to rise in the future? Wang Jiyue, a senior investment banker, told reporters that due to the limited financing scale of the Beijing Stock Exchange, the upper limit of the issuance fee is not high, and it is expected that it will not continue to rise.
责编:史健 | 审核:李震 | 监审:万军伟
(Source: Brokerage China)