Transsion suffers STAR Market IPO setback
Aug 7, 2019
Transsion, the Chinese handset maker dominating sales in the African market, has restarted efforts to go public on China’s Nasdaq-style stock market after the process was suspended on Tuesday. The company is coming under mounting scrutiny from securities regulators.
Why it matters: The setbacks provide a broad hint that the registration-based listing system for the STAR Market maintains a high listing threshold despite efforts to convince high-tech companies to list domestically.
- The main boards of China’s two stock exchanges, the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange, boast stringent entry requirements that allow only profitable companies to list.
- The STAR Market, part of the SSE, is the country’s first index allowing loss-making firms to issue shares.
- This doesn’t make the listing process any easier for applicants, however. Companies have to be accepted by the exchange and then go through auditing and inquiries before they can successfully go public.
Details: The SSE website showed Transsion’s IPO application as “suspended” on Tuesday, meaning the financial statements filed were no longer valid.
- The status reverted back to “in progress” on Wednesday morning after the company submitted updated statements to the exchange, a Transsion spokesperson told TechNode. The firm is continuing with preparations for the listing, they added.
Context: The Shenzhen-based company enjoyed a combined 58.7% share of Africa’s mobile phone market last year thanks to its Itel, Tecno, and Infinix brands, according to research firm IDC. It also led the African smartphone market with a 34.3% share, followed by South Korea’s Samsung with 22.6% and Huawei with 9.9%.
- Transsion was among the first batch of companies to file STAR Market IPO applications in March. The company aims to raise up to RMB 3 billion (around $430 million), according to its prospectus.
- The STAR Market’s committee sent 62 official queries to the company in May, and the company was notably absent on the first day of trading on July 22.
- These queries covered the competitiveness of core technologies and other technical advantages. The company only spent 3.1% of revenue on research and development in 2018, according to its prospectus.