What’s new: The Shanghai Stock Exchange has accepted PC-maker Lenovo Group Ltd.’s application to list on its Nasdaq-style STAR Market, according to the bourse’s website (link in Chinese).
A Lenovo listing on the Chinese mainland would mark a symbolic homecoming for one of China’s oldest and most recognized high-tech companies.
The Beijing-based Lenovo, currently listed in Hong Kong, plans to make its new listing in Shanghai by selling as much as 10% of its equity as Chinese depositary receipts (CDRs), according to a copy the company’s preliminary prospectus (link in Chinese) filed Thursday. That amounts to a fundraising goal of 10 billion yuan ($1.6 billion), which the company plans to use to replenish its operating capital and develop new products and services related to the cloud, digitalization and artificial intelligence.
The background: Lenovo announced the Shanghai listing plan in January. If all goes as planned, it will become the first red-chip company to make a mainland listing by selling CDRs. Red chips are mainland-based enterprises incorporated internationally and traded offshore, usually in Hong Kong.
Modeled after American depositary receipts, CDRs allow foreign-traded companies to sidestep mainland listing rules — such as profitability requirements and restrictions on weighted-voting rights — something that tech and family-owned companies favor for maintaining control.
Related: Update: Lenovo Stock Finally Comes Home After Two Decades Abroad
Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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