China’s securities regulator rebuked China International Capital Corp, the nation’s largest investment bank, over due diligence failures for the initial public offering of computer manufacturing giant Lenovo.
CICC was rebuked by the China Securities Regulatory Commission (CSRC) for mainly relying on information provided by the issuer to draw conclusive opinions about Lenovo, according to a notice from the regulator.
Five CICC bankers involved in the IPO were summoned by the CSRC earlier this month for regulatory review after failing to produce sufficient and accurate information to demonstrate that Lenovo was qualified to list on Shanghai’s Nasdaq-styled Star board.
CICC staff – including investment banking head Wang Sheng – would have the right to appeal to local courts on the regulatory decision, the notice added.
IPO Due Diligence
The regulator's rebuke is part of a broader move to tighten toughen requirements with criticism leveled against others over similar issues including Wanlian Securities and Sinolink Securities.
Earlier this year, IPO requirements on the Star board tightened in various areas including research and development capability, patents, revenue growth rate and capacity to innovate in an effort to improve the quality of issuers.
Founded in China, Lenovo is Asia’s largest manufacturer of personal computers and it was seeking to raise about 10 billion yuan ($1.57 billion) from the Shanghai IPO to fund artificial intelligence, cloud services projects and industrial investments.
