HONG KONG -- New York is poised to see its first initial public offering by a Chinese company in seven months amid signs the city could see a new flurry of such listings.
Healthcare supplies maker Meihua International Medical Technologies is on track this week to price its debut share sale, which would raise up to $57.5 million, according to the New York Stock Exchange's online IPO hub. New U.S. stocks usually start to trade a day after pricing.
Meihua could have company soon.
Eight Chinese companies filed initial public registration statements to sell stock in the U.S. -- documents known as F-1s -- with the U.S. Securities and Exchange Commission in the four weeks between Dec. 30 and Jan. 28.
Fifteen other Chinese companies that started their share sale registration earlier, including Meihua, have filed updated documents since Dec. 30. A few of these companies are already listed but are seeking to sell more shares, requiring them to repeat the registration process.
Over the six-month period ended Dec. 29, the SEC received just eight initial F-1s from Chinese companies.
A series of announcements from regulators in Beijing and Washington helped set the stage for the rush of filings by clearing up some of the uncertainty that had brought Chinese listings in the U.S. to a virtual halt since Didi Global's disastrous $4.4 billion IPO last June.
"There are regulatory efforts on both sides of the Pacific that are working toward building a regulatory framework where there is some backstop and transparency," said William Rosenstadt, founder of New York law firm Ortoli Rosenstadt and an adviser to a number of current IPO candidates.
Since early July, only LianBio, a biopharmaceutical drug developer with most of its operations in China but headquartered in New Jersey and considered a Cayman Islands company by the SEC, has managed to complete listing in the U.S., according data compiled by information service Dealogic.
On Dec. 24, the China Securities Regulatory Commission unveiled draft rules that would require companies to get permission to list overseas.
The companies that have filed with the SEC since then say they believe the new rules do not apply since they have not yet been finalized. This may hint at a race to list before the CSRC puts the new requirements into formal effect.
Notably, the eight new filers and most of those which have updated their prospectuses are seeking to raise no more than Meihua, and as little as $1 million -- peanuts compared to deals like Didi's IPO.
Amid a rush capped off by that ill-fated offering, 53 Chinese companies raised a total of $15.1 billion through U.S. IPOs last year, or an average of $285 million per sale, according to corporate advisory Kroll.
This was more offerings than ever seen in one year, even with the drought after Didi, and the highest sum raised since 2014. However, shares of the companies that listed last year were trading 53% below their IPO price on average as of Jan. 21, according to investment research company Renaissance Capital.
If Meihua's IPO on the Nasdaq Stock Market and that of other pending issuers go well, that could help to restore confidence, some market players say.
"It is very much a litmus test, the first few, how they do," said David Williams of Williams Capital Advisors in Palo Alto, California. "If the first few IPOs trade down on opening day, then the window is going to shut again."
These offerings should also provide more clarity as to regulators' stance. "The tip of the spear is going to be the smaller cap lower-risk issuers," said Rosenstadt.
Others believe bigger Chinese companies will remain on the sidelines, even if the small Chinese IPOs go well.
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