Taipei, Foxconn Industrial Internet Co. Ltd. (FII), an Internet-focused subsidiary of Taiwan-based manufacturing giant Hon Hai Precision Industry Co., confirmed Saturday that it has received official authorization for an initial public offering in Shanghai.
After the official approval from the China Securities Regulatory Commission (CSRC), China's top securities market regulator, FII is expected to consult with its financial advisors or underwriters to set an exact date for the listing, while publishing a prospectus for the listing, which has drawn great market attention.
Market analysts said FII is expected to launch an IPO on the Shanghai Stock Exchange at the end of May or early June to take advantage of an inclusion of China's Chinese yuan-denominated A shares into the MSCI Emerging Markets Index by global index provider MSCI Inc. in June.
The MSCI Emerging Markets Index is being watched closely by foreign institutional investors as they plan investments in emerging markets such as Shanghai.
Market sources said FII is likely to set the listing price at around 13.8 Chinese yuan (US$2.18).
The FII application for the IPO was submitted Feb. 1 to the CSRC, the listing review committee of which processed it March 8 and immediately gave approval, catching the market off-guard, as the processing of such applications in China usually takes about a year. But for FII, the whole review process took the CSRC only 36 days.
The quick review of FII's IPO application was an indication of China's plan to lure high-tech firms as it prepares to develop its technology and innovation sector, dealers said.
But the CSRC did not issue the official approval for the listing until Friday. Chinese media said Saturday that the delay was because the IPO would absorb too much funds from the market based on FII's original plan to raise 27.25 billion yuan in funds. The media report said it was possible that FII would agree to cut the size of its fund-raising before obtaining official approval.
According to the original prospectus, Hon Hai is expected to retain an approximately 85 percent stake in FII after the IPO.
FII's investment in China will focus on a wide range of new technologies, such as cloud-based computing, high performance computing, 5G Internet communication solutions for industry, data centers and smartphone-related applications, Hon Hai said.
Hon Hai added that the listing in Shanghai will allow FII to tap the rapid growth of Internet communication and cloud-based computing business in China, and that the proceeds from the IPO will be invested in the expansion of its Internet business there.
In 2017, FII posted 15.87 billion yuan in net profit, up 10.45 percent from a year earlier, while its sales grew 30 percent year-on-year to 354.54 billion yuan.
Its prospectus shows that its major clients include Amazon, Apple Inc., Dell Inc., U.K.-based telecom equipment provider Arris International Plc., and Chinese smartphone brand Huawei Technologies Co. and PC vendor Lenovo Group Ltd.
The top five clients accounted for more than 70 percent of FII's revenue, according to the prospectus.
Source: Focus Taiwan News Channel