IPO a Foreign Enterprise in China; Michael Sylvester

ipo.jpgCompanies IPO for one of two reasons, fund raising or as an exit strategy and sometimes it is a combination of both.

Well, a few years ago it became possible for foreigners to take advantage of the Chinese IPO market for their foreign holdings here in China too.

And given the multiples in China in the 30-35 range, when compared to 7-10 or so in the West, even after all the taxes are paid, a company can do very well here.

 And with the ability to export profits, have any taxes paid in China be deducted from your home  country (due to the Double Tax Avoidance Treaties in place here now) there are fewer and fewer  reasons not to seriously consider using your existing company as a source of expansion capital.

 At the base level, a company has to be in valid reporting status (which we all have to do anyway)  and be making at net of ~ 800,000 USD per year for the last two years.  If you are at that level in  China it is likely that the rest of the requirements are already met.  And if there any capital or  technical requirements, it is likley that we can cover any shortfall from the China PE market.   

 If China is here to stay and you are already invested at this level, we would advise looking closely  at what this changing world we live in really looks like from this side of the ocean.