Deutsche Boerse eyes more Chinese IPOs

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(Agencies)
Updated: 2008-09-14 09:47

Deutsche Boerse will go ahead with plans to open an office in Beijing to attract Chinese IPOs, despite the global financial crisis, a senior official at the exchange said on Friday.

"We are at the downward phase, but it won't hinder us to promote the Deutsche Boerse in China," the exchange's Alexander Graf von Preysing, a senior vice president responsible for IPOs, said at the Hamburg Summit: China meets Europe.

The exchange hopes to get regulator approval to open a Beijing office by the end of this year, after putting China on its radar two years ago.

But it is a late comer among major exchanges' race to Beijing to lure Chinese offerings as IPOs elsewhere dwindle.

The NYSE Euronext and Nasdaq OMX opened offices in December last year. The London Stock Exchange raised 109 million euros ($152.7 million) in the first main market floatation by a Chinese issuer on the German bourse.

That was followed by two main market listings in 2007, Asia Bamboo and Greater China Precision Components, which raised a combined 111 million euros. In July this year, Business Media China raised 31 million euros.

But Graf von Preysing acknowledged that investors were becoming increasingly nervous.

So far this year, 34 Chinese firms have listed overseas, raising $7.2 billion in total, down 80 percent from the $37.7 billion raised by 107 Chinese issuers in 2007, according to Thomson Reuters.

China's wireless data card provider Vtion Wireless Technology shelved its 152 million euros German IPO plan in November due to unfavourable market conditions.

All recent Chinese offerings on the German bourse are trading below their IPO levels, with many plummeting over 50 percent from their issue prices.

ZhongDe shares, which traded 58 percent above their listing price of 26 euros two months after the IPO, have since lost more than half of their value.

However, Graf von Preysing is confident the exchange will draw Chinese listings with its lower listing costs and better trading in the secondary market.

The Deutsche Boerse aimed to attract trading and liquidity rather than targeting IPOs for listing fees, he said.

The Frankfurt exchange charges a listing fee of 5,500 euros, while the LSE charges 200,000 euros. The overall listing costs range from 7.5 percent to 9.5 percent of the IPO proceeds in Germany, compared with London's 8.9 percent to 17 percent.

So far, the Deutsche Boerse has only targeted China, Russia and India for international listings. It has no plan to expand its scope in near future.

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