Chinese Regulator Stalls IPOs, Frustrating Investors

It’s not too often that China-based leaders of major venture capital and private equity firms, including Neil Shen of Sequoia Capital China and David Liu of DCP, gather as a group to voice their concerns to China’s securities regulator. But an opportunity arose in late July when the two were among dozens of investors who met with the China Securities Regulatory Commission to discuss challenges facing private investments in China.

The discussion was dominated by worries about how long the regulator is taking to approve initial public offerings for Chinese firms wanting to go public overseas, according to a person present at the meeting. A new set of guidelines promulgated by the regulator earlier this year—prompted in part by Didi Global’s disastrous IPO in New York two years ago—has stalled the overseas IPO approval process of any companies with a sizable operation in China. The new rules govern public offerings in Hong Kong as well as the U.S. and aim to plug a loophole that had allowed companies including Didi to list shares without explicit approval of Chinese authorities.