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Jingtian & Gongcheng Assisted Jiangsu's First Micro-Finance Company - Taihe Micro-Finance with IPO in Hong Kongpublish time:2017-05-08

Yangzhou Guangling District Taihe Rural Micro-Finance Company Limited (Taihe Mirco-Finance, stock code: 08252.HK) successfully issued H shares and was listed on GEM of Hong Kong Stock Exchange (HKSE) on May 8, 2017.Taihe Mirco-Finance has issued a total of 150 million shares, offering price at HK$1.34 per share, with proceeds amounting to about HK$201 million.

 

After Hanhua Finance (03903.HK), Zuoli Micro-Finance (06866.HK), Huixin Mirco-Credit (01577.HK), IPO successors of micro-finance companies on HKSE have been barely observed. Taihe Micro-finance broke the ice by landing GEM of HKSE as a HKSE-listed micro-finance company, and was expected to become a new IPO model for other micro-finance companies.

 

According to the statistics from Yangzhou Association of Micro-Credit, Taihe Mirco-Finance is the first rural micro-finance company authorized by Jiangsu Province People's Government Financial Affairs Office. Since March 2015, Taihe Mirco-Finance's service area has been extended to all regions of Yangzhou. According to the Ipsos Report, in terms of registered capital, Taihe Mirco-Finance was the second largest licensed micro-finance company in Yangzhou in 2015; and in terms of profit and outstanding loan balance, it was Yangzhou's largest micro-finance participator as of 2015 with market shares at 11.12% and 6.23% respectively.

 

Jingtian & Gongcheng was the PRC legal counsel to the sponsor and the underwriter of the project, offering comprehensive Chinese legal services for them.

 

Since micro-finance companies are governed by strict and complex regulations in China, Taihe Mirco-Finance's compliance, especially compliance of all business regulatory indexes during the track record period, was the audit focus of HKSE as the IPO project was proceeded. For compliance of such key indexes as average annual interest rate, max annual interest rate, financing proportion, micro-finance and San Nong (agriculture, rural areas and farmers) loan balance, and for relevant legal issues, lawyers of Jingtian & Gongcheng have raised constructive ideas and suggestions to solve the problems and assisted the sponsor of the IPO project to disclose Taihe Mirco-Finance's compliance of business regulatory indexes in a way that HKSE would accept, and thus won full recognition from the client.

 

Since the set-off in 2009, China's micro-finance industry has now entered its eighth year. As the "national PE" boom slowed down, the micro-finance industry has entered a stage of tremendous growth. However, due tohorizontalcompetition, policy restriction and other factors, the micro-finance industry has also been under great pressure. Going public can benefit a company through breaking up the financing bottleneck, and quick scaling up. Capital management strategically concerns the survival and development of a companyandis key to achieving higher strategic objectives. Micro-finance companies face many restrictions in the A-share market, so going public in the stock exchange market of Hong Kong or of the United States becomes a feasible way.