Drew Bernstein, Co-Managing Partner, MarcumBP

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    The Big Freeze for Chinese IPOs

    Smaller deals will test the appetite of investors amid a new regulatory landscape

    At the end of June 2021, Chinese IPOs were on track to post a record-breaking year. Didi Chuxing had completed the most eagerly awaited listing from China since the debut of Alibaba. Companies from the technology and healthcare sectors were flocking to NASDAQ and the NYSE, where they could bypass the long waiting list for the Mainland’s exchanges and achieve higher valuations and greater liquidity than what Hong Kong typically offered.

    In SEC Audits, IPOs

    China Takes Control Over Offshore Listings

    For two decades, IPOs by most Chinese companies on U.S. stock markets have existed in a regulatory no man's land. Technically, investment in the sectors most enticing to overseas investors — including internet, media, telecom, and education — was off-limits to foreign ownership. But beginning with the listing of Sina Corporation in 2000, Western lawyers and investment bankers were able to successfully skirt these rules using a variable interest entity, or VIE, structure. Foreign investors could not own the assets of or exert direct control over the Chinese operating company but theoretically had a claim on the profits and cash flows and the right to acquire ownership should Chinese law change to make that permissible in the future.

    In IPOs

    How Much Cash Is in Your SPAC?

    If you look at the headline numbers, SPACs appear awash with cash. In 2021 alone, 436 SPACs have raised $126 billion, for an average of $289 million apiece, according to SPAC Insider. Today, over 450 SPACs are scouring the universe for an enticing private company target into which to deposit their bag of money.

    In SPACs

    SPACS and Short Sellers Mix It Up

    What can management do to avoid becoming the next short-seller roadkill?

    With 417 funded SPACs currently in search mode for the perfect private company to merge with, 2021 is becoming the “Year of the de-SPAC” following the “Year of the SPAC” in 2020 that carried over into the exuberance of the first quarter of 2021. These SPAC sponsor teams are sitting on about $140 billion of capital in trust, supplemented by tens of billions more in PIPE investments, which could theoretically generate a trillion dollars of market capitalization for newly formed public companies.

    In SPACs

    All Eyes on Southeast Asia as Next SPAC Hunting Ground

    A High-Growth Debutante Ball of sorts is months away. Dateless SPACs (i.e., special purpose acquisition companies) would be wise to fix their gaze on the hot young Southeast Asian start-up market if they don’t want to be left without a dance partner.

    In SPACs

    The Righteous Rage of Carson Block

    Famed Short Seller Lets Loose on SPACs, China, Robinhood, and Archegos

    Reveals How He Would Run the SEC and the Concept Behind a New Long Fund

    Carson Block is the most famous short-seller of his generation, known for tome-length, densely researched short reports that eviscerate companies where he believes management is lying and taking shareholders to the cleaners. He is not afraid to use the f-word — “fraud” — in his reports. And as you will discover in this interview, his views on the market are laced with f-bombs and salty stories as well. So, trigger warning, folks: if you are squeamish about looking under the rock that is sometimes Wall Street, this interview may not be for you.

    In Forensic Accounting, Investing in China, China short-selling, SPACs

    Chinese IPOs Have Explosive Start in Q1 2021

    Didi Chuxing initial public offering could drive significant tailwinds for Chinese issues

    Chinese IPOs had a strong start in the first quarter of 2021, with 24 initial public offerings from Greater China that raised $5.8 billion. According to Renaissance Capital data, that's up by 728% over the $700 million raked in by Chinese names listing on NASDAQ and the New York Stock Exchange in the first quarter of 2020.

    In Investing in China, IPOs, SPACs

    SEC Weighs in on SPAC Audit & Accounting Issues

    Financial reporting, governance, and internal controls are seen as "risks" to investors

    On March 31st, the SEC’s Acting Chief Accountant, Paul Munter, issued a lengthy “public statement” detailing concerns about private companies' readiness that go public through a SPAC merger to be successful as listed companies. His admonitions come as SPAC IPOs have exploded in the first quarter of 2021, with 298 SPACs raising over $87 billion, nearly 24 times the $3.49 billion raised by 13 SPACs during the comparable period in 2020. At the same time, SPAC IPOs that had been trading at huge premia to the cash held in trust and outperforming the S&P back in February have seen a significant retrenchment, with an average return of just 1.5% for SPACs that debuted in Q1 2021, according to Renaissance Capital.

    In SEC Audits, IPOs, SPACs

    Choosing the Right Exchange

    Chinese CEOs now have a range of IPO alternatives to navigate

    In 2020, China dominated the global IPO market as never before. 565 new public companies were born through listings on China’s domestic markets, Hong Kong, and the U.S. exchanges, raking in $133 billion dollars. That is up by 51% from 2019 and compares to $78.2 billion raised by 218 operating companies on the U.S. markets during the same period. While the U.S. still led the world in capital raising last year, that was primarily due to the unprecedented 248 SPAC IPOs that raised $75.5 billion dollars. In 2021, SPAC IPOs based in Asia are taking off as experienced private equity, venture, and hedge fund investors launch their own SPAC initiatives. A SPAC merger creates yet another option for the management teams of companies from Greater China to consider in order to raise capital and obtain public status on an accelerated timeframe.

    In Investing in China, IPOs
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