Deloitte assists listing of CRCHI on SSE STAR Market
1st spin-off listing of an SOE on SSE STAR Market; Deloitte China as the 1st audit institution among the Big Four to support a SOE spin-off listing in the A-share market
As the registration-based regime of the Mainland's SSE STAR Market and ChiNext continues to be implemented, Deloitte China assisted China Railway Construction Heavy Industry Corporation Limited ("CRCHI"; stock code: 688425.SH), the wholly-owned subsidiary of China Railway Construction Corporation Limited ("CRCC"; stock codes: 1186.HK and 601186.SH), to list on Shanghai Stock Exchange and debut on the SSE STAR Market on 22 June 2021.
CRCHI is the first subsidiary spun off from a state-owned enterprise (SOE) to go public on the SSE STAR Market, and the largest special equipment manufacturing IPO (by proceeds raised) since the establishment of the SSE STAR Market. Deloitte China also became the first auditor among the Big Four to serve such a spin-off listing in the A-share market.
In its public offering, CRCHI issued 1.285 billion shares, raising about RMB3.688 billion. If the over-allotment option is fully exercised, it will have offered 1.478 billion shares raising about RMB4.242 billion in total.
CRCC is a mega SOE engaged in infrastructure construction and a strategic SOE client of Deloitte China. CRCHI is the core enterprise of CRCC's manufacturing business.
The successful listing of CRCHI also marked several milestones in the development of the SSE STAR Market, including:
- The first subsidiary to spin off from an SOE for listing on the SSE STAR Market since the China Securities Regulatory Commission issued the Provisions on Pilot Domestic Listings of Subsidiaries of Listed Companies in China. This listing is demonstrative and will lead other SOEs to make such spin off listings of their subsidiaries on the SSE STAR Market and other A-share markets;
- The first SSE STAR Market spin-off listing of an SOE supported by a Big Four professional services firm. This success is certain to lay solid foundations for Deloitte China to develop spin-off listing services provision in the A-share market; and,
- The first IPO in the Chinese Mainland capital market to offer an over-allotment option, a strategic allotment option and employee stock options at the same time.
About the clients
As the core manufacturing enterprise of CRCC and a subsidiary of an infrastructure-related SOE, CRCHI is mainly engaged in the design, research, manufacturing, sales, leasing and servicing of tunnel boring machine (TBM) equipment, rail track systems, and special professional equipment.
CRCHI broke the prolonged monopoly of foreign underground engineering and rail track system providers in China. It successfully developed and manufactured China's first series of global standard PC (set) heavy equipment products to provide an alternative to imports, and is committed to becoming a core national enterprise of China. During its pre-listing track record period, it was in the top two by production volume for shield tunneling machines and had leading market share in TBM equipment.
CRCHI established the first national standard enterprise technology center in the industry. It has led or participated in 61 major national, provincial and municipal and industry science and technology programs, including 38 national science and technology projects. It has 1,084 Chinese and overseas patents. It is also a key high-tech enterprise recognized by the state, and an enterprise that demonstrates China's deep integration of informationization and industrialization.
CRCHI's development is in line with China's trends in smart manufacturing. It has received awards or been granted titles including: the First National Major Technology Equipment of Demonstration Value, China's Best Independent Innovation Enterprise, Model Enterprise of the Country's Deep Integration of Informationization and Industrialization, and the Innovation Model Award for Chinese Equipment.
(Source: The Prospectus of CRCHI for its IPO and Listing on the SSE STAR Market published by CRCHI on 16 June 2021).
About this engagement
As the first listing of an SOE subsidiary on the SSE STAR Market, the successful IPO of CRCHI is demonstrative and provides a valuable experience of how the implementation of new spin-off rules of the SSE STAR Market are optimizing resource allocation in the capital market, deepening merger and acquisition and restructuring, and promoting mixed-ownership reform of SOEs.
Deloitte China is the reporting accountant for CRCHI's listing. The engagement team started the IPO-related work in April 2018. With the full support of Lily Yin, managing and lead partner in Audit & Assurance, and the joint efforts of Celine Ma, Audit & Assurance partner; Chuan Jiang Tong, Engagement Quality Control Review partner; Xiaohong Cong, Technical partner, and their teams, we provided CRCHI with a professional, high-quality audit using our vast industry experience and world-class services.
Deloitte China congratulates CRCHI on its successful listing on the SSE STAR Market. We look forward to assisting more innovative technology companies to gain advantages in an increasingly complex and competitive business environment through our high-quality professional services capabilities.
Stay tuned for more exciting listing news from our clients soon!
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