Two more Chinese firms call SA home
TWO Chinese companies have chosen Adelaide as their home for planned $10 million backdoor listings on the Australian Securities Exchange next year.
Rongtai Logistics is currently in due diligence with plans to list its e-commerce steel logistics business in the second quarter of 2010.
Biotech firm Gansu must first restructure its business before taking advantage of its links to the South Australian Research and Development Institute and seeking a local listing.
Both companies will offer a new lease on life for existing inactive listed firms.
It will allow the company to bring its business to market in a ``backdoor listing'' with reduced bureaucracy.
If successful, the transactions would bring 2010 close to the international success of 2007, when three Chinese and Malaysian companies - Chinese nylon producer Mesbon China Nylon, Chinese softgoods manufacturer TWT Group and Malaysian gold trader IGDX Holdings - raised $26 million in Adelaide listings.
Chinese fabrics and textiles company Thomas Bryson International last year raised $6.85 million in an Adelaide listing. Tindall Gask Bentley senior partner Brendan Connell, who is managing the listings, would not disclose the Chinese targets but said he expected Australia - and Adelaide - to become a growing home for Chinese companies.
``We are up to about 10 Chinese companies on the ASX and I think it will continue,'' he said.
``They still have the money (capital) and low wages, which gives them an obvious competitive advantage . . . but SA still has regional status.
``What I am trying to do here is list on the Adelaide board of the stock exchange and get as many SA directors on boards.''
Australia's stock exchange is seen as more attractive to Chinese companies as there is little interference from the government - other than to enforce disclosure rules.
However, Mr Connell said Adelaide's cost-competitiveness was serving as an increasingly important attractor for Chinese companies.
``One-third of Chinese seeking permanent residency come to Adelaide so we are in a unique position to access those companies and hopefully their wealth, because they have the money to spend,'' he said.
``They want the clear skies and they are avoiding the eastern states because it is quieter here and properties are cheap, and there is quite a good Chinese community here.''
But while increasing numbers of Chinese companies are expected to make the move on to the ASX, there remain some corporate differences, Mr Connell said.
``The thing that is holding them back is they don't trade well (on the ASX) after listing,'' he said.
``They need to market themselves and boost their profiles''
Russell Emerson, The Advertiser, 8 December 2009