Chinese companies to kick off global depositary receipt sales on SIX Swiss Exchange as regulator grants conditional approval for Keda Industrial

The first sale of global depositary receipts (GDRs) on the SIX Swiss Exchange issued by a Chinese A share company will kick off as early as Friday, after Keda Industrial Group said it had received conditional approval from Swiss regulators for a listing.

GDR offerings by Chinese companies have been enabled via a stock exchange scheme established between China and Switzerland, after Swiss regulators recently finalised rules for investors to trade GDRs that can be swapped into A shares on the mainland, said a person familiar with the situation who declined to be identified as the information is not public yet.

According to a report by Bloomberg on Thursday, two Shanghai-listed companies, industrial machinery maker Keda Industrial Group and lithium battery maker Ningbo Shanshan, will begin taking orders for the share sale from investors as soon as Friday. Keda Industrial said in a Shanghai Stock Exchange filing on Thursday that its prospectus is still pending approval.

“We believe that there will be more A share companies that will consider refinancing through GDR issuance,” said Mandy Zhu, head of China, global banking at UBS. “The GDR market has opened an additional door for A share companies to raise funds.”

GDRs, which are certificates issued by custodian banks to represent China’s yuan-denominated A-shares, can be swapped into the underlying A shares and sold on the exchanges of Shanghai and Shenzhen after a 120-day lock up period.

The link between the two Chinese bourses and the SIX Swiss Exchange is the latest connect mechanism to go live after its predecessor, the Shanghai-London Stock Connect, was launched in 2018. It already lists GDRs by five Chinese companies. Until now there has been no GDR on the SIX Swiss Exchange.