Founding partners of Bridge Point Capital, Mark Young and Nadia Tian, met with members of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) on November 12th.
The SASAC is a special institution of the People’s Republic of China, directly under the management of the State Council. It's responsible for managing and supervising state-owned enterprises, including appointing top executives and approving any mergers or sales of stock or assets, as well as drafting laws related to SOEs.
Mark Young gave an extensive presentation about the benefits that the U.S. stock market can bring to the emerging economies in China and why Special Purpose Acquisition Companies are the perfect vehicle for doing so. SPACs are not only the most cost-effective resolution but also the most time efficient to this win-win opportunity. The regular IPO process can take 9-12 months while SPACs can help a company go public in just 3-6 months. SASAC showed strong interest in catalyzing private Chinese companies in breaking into US market. Listing in the Hong Kong or Shanghai exchange could be subject to stricter control methods and restrictions by Chinese securities regulators, resulting in extremely long waiting time before going public. Listing in China is also subject to CRS (Common Reporting Standard). The United States, on the other hand, has not started CRS, thus does not require financial disclosure back to China.
Some other practical advantages in listing in the U.S. is the reputation of the NYSE and regulatory supervision of the SEC. Companies listed in the U.S. has the implicit SEC stamp of approval which allows investors to have more trust when reading the financials and making the investments. The U.S. exchanges will never turn away foreign companies looking to go public.
During the FAQ, a good question was raised by a member of the SASAC. If a company is already listed in China, can it still be listed in the U.S through a SPAC? The answer is yes, and it actually gives the company more credibility to do a second offering in the U.S. market. However, if a Chinese company wants to be listed in the U.S., it needs to use an offshore structure such as a BVI company for tax and regulation purposes.
Bridge Point Capital is a private equity firm based in New York with a focus on U.S.-China cross-border investment. We invest in disruptive late-stage healthcare companies that can benefit from penetrating the vast yet unexplored Chinese healthcare market. We aim to leverage our expertise in both healthcare and capital markets to establish a sustainable investment platform for our investors.