Green Trend: The Road to an Overseas Red-Chip IPO
(7 pages of text)
Case (Gen Exp)
In July 2019, Green Trend Holdings Co. Ltd. (Green Trend) faced a difficult situation with regard to flaws in the preparation of its proposed initial public offering on the Stock Exchange of Hong Kong. According to the remedy measures raised by the underwriter facilitating the initial public offering process, Green Trend needed to raise additional capital of ¥1 billion with a proposed annual interest rate of about 30 per cent. Of course, the company could have postponed the initial public offering; however, without the long-awaited return following a successful initial public offering, all the efforts taken in past years would be in vain. The uncertainty of the capital market would further complicate the future road to an initial public offering. Did Green Trend have better alternatives?
This case is suited for an undergraduate- or graduate-level course that touches on corporate financing, capital markets, and corporate financing decisions (innovation and regulations). By working through the case and assignment questions, students will have the opportunity to:
- Understand the different levels and the structure of the Chinese capital market.
- Understand the regulations governing capital fund transfers.
- Understand the various ways of designing an overseas financing structure as well as the concepts of handling related core problems.
- Understand the basic concepts and methods of business restructuring prior to an IPO.
China, Large, 2019
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