Economic and legal analysis of Chinese issuers in Germany
Blättchen & Partner presents economic and legal analysis of Chinese issuers in Germany
- No attractive Chinese companies are listed on the stock exchange in Germany
- All New Chinese issues have massive price losses (-69.4 )
- The last 15 new issues could not be fully placed
- Lack of liquidity in the share
- At Group level, partly irrational liquidity holdings
- The Executive Board and Supervisory Board do not fulfil their legal obligations adequately
Munich | Stuttgart | Zurich, November 2014. Blättchen & Partner, one of the leading corporate finance consultants, has subjected the China IPOs in Germany to a critical analysis for the third time. The current study (as of 31 October 2014) sheds light on Chinese issuers from an economic and legal point of view. It also addresses specific features that have not yet been considered, or only marginally.
Deutsche Börse AG has worked hard for several years to persuade Chinese companies to go public in Germany. These efforts have now been discontinued, not least because of poor price performance and increasing accounting irregularities and even fraud. Already almost characteristic of Chinese issuers are: lack of transparency in business models and business development, poor communication with the financial public and lack of liquidity in the stock. As a result, mainly private investors engage with Chinese issuers. As a result of the catastrophic price development, Chinese issuers have become the biggest destroyers on the stock market. Private investors are the losers.
The listed German AG is often only a letterbox company without its own employees. Communication between the Executive Board and the Supervisory Board is extremely difficult due to language barriers. Both institutions are therefore unable to fulfil their legal obligations reliably. This can lead to significant liability risks.
The sharp decline in placement rates shows that investors are laging at a distance from Chinese new issues. Thus, the last 15 new issues could only be placed incompletely. In some cases, the cost of emissions was even higher than the volume of emissions.
“In light of the study results, it is more than astonishing that four unknown Chinese companies have gone public again in Germany this year. The reaction on the capital market to this was clear. Nevertheless, I fear that weak Chinese companies in Germany will continue to be recklessly pushed onto the stock market by securities trading banks in the future,” says Dr. Konrad Bösl, CEO of Blättchen & Partner.
About Blättchen & Partner
With its innovative financial strategies, Blättchen & Partner has been one of the leading corporate finance experts for almost 30 years. With offices in Munich, Stuttgart and Zurich, the company specializes in advising on IPOs, bond issues, corporate investments and M&A transactions, as well as management participation programs and executive compensation. More than 300 transactions are a testament to the company’s proven expertise. The growing interdisciplinary competence network, the high level of customer satisfaction and the large number of publications on important financing issues reflect the recognised reputation of Blättchen & Partner .