Advised by Jingtian & Gongcheng, WongPartnership and O’Melveny & Myers, New Century Shipbuilding recently launched its IPO on the Singapore Stock Exchange (SGX), aiming to raise approximately US$731m. This will be the biggest IPO by a Chinese company to be listed on the SGX and Singapore's second-biggest listing since CapitaMalls Asia.

Advising the issuer as Singapore counsel, WongPartnership revealed that much of the complexities arose from the issuer’s industry. “The shipbuilding industry is classified as a restricted industry in the PRC where foreign ownership is restricted to a maximum of 49.0%. To enable the Company to control the financial and operating policies as well as to enjoy the full economic benefits of the entities, a series of contractual arrangements were entered into. Also, due to the complexity of the contractual arrangements, a series of safeguards were put in place. However, as advised by Jingtian & Gongcheng, PRC counsel to the issuer, the position of PRC authorities in respect of such contractual arrangements is unclear,” said WongPartnership’s lead partner Raymond Tong.

According to a statement released by New Century, the issuer has chosen to list in Singapore not only because it is a shipping hub that is used by many of its customers but also because its closest competitor, Yangzijiang Shipbuilding Holdings, is also listed there.

“The listing of New Century shows that the Singapore Stock Exchange is still interested to get quality PRC companies to list on SGX.  In addition, the successful listing of the Company on SGX sends a signal that the SGX accepts and welcomes PRC companies in industries with foreign ownership restrictions with a contractual arrangement structure, which has been accepted in other stock exchanges such as Hong Kong,” said Tong.

Shipping is not the only industry affirming the rising popularity of Singapore amongst Chinese investors. Fufeng Group, an international bio-products manufacturer, also recently issued US$120m worth of convertible bonds on the SGX. Last year, China Gaoxian Fibre Fabric, a producer and seller of premium differentiated fine polyester yarn and warp knit fabric, also launched its US$83.2m IPO in Singapore.

*The IPO is being arranged by Morgan Stanley and UBS, with DBS helping to coordinate the retail tranche.

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