Chinese companies are increasingly looking to Germany to raise capital and revive interest in their Global Depositary Receipts (GDRs) in Europe. Companies such as Sungrow Power Supply $300274 and JinkoSolar$JKS (+0,85%) are planning to issue GDRs in Frankfurt with a total value of up to 1.16 billion euros. This initiative could strengthen the links between the Chinese and German capital markets and offers an attractive opportunity for companies to position themselves globally.
However, success in Europe is by no means guaranteed. Following a surge in GDR listings in Switzerland, approvals were halted by the CSRC due to arbitrage concerns. Chinese investors bought GDRs and converted them into shares on the domestic market to take advantage of the persistent price differentials, while there was little interest from European investors.
Nevertheless, Hang Wang, partner at Baker McKenzie in Beijing, emphasized that it was never the intention of the Chinese regulators to stop the offerings of GDRs abroad. A spokesman for Deutsche Börse said it was technically ready to welcome GDRs to the Frankfurt Stock Exchange.
The CSRC set new rules in May 2023 to resume GDR approvals, introducing requirements for companies including registering with the regulator within three working days of submitting their overseas GDR listing applications and disclosing the identity of buyers. These measures could help other companies follow the example of Sungrow and JinkoSolar.
It is important to note that Sungrow and JinkoSolar are not the first Chinese companies to seek a GDR listing in Frankfurt. In late 2022, the board of Shanghai-listed Sany Heavy Industry Co approved the issuance of GDRs before Sany abandoned the plan in April due to changes in internal and external conditions.
However, a successful sale of GDRs in Frankfurt could trigger further such deals. Jean Thio from Clifford Chance emphasized that China has long been Germany's largest trading partner and companies will consider their listing targets according to their business presence.will consider.
