Hon Hai Precision Industry Co (鴻海精密) on Saturday confirmed that its Internet-focused subsidiary, Foxconn Industrial Internet Co Ltd (FII, 富士康工業互聯網), has received official authorization for an initial public offering (IPO) in Shanghai.
After the China Securities Regulatory Commission granted its official approval, FII was expected to consult with its financial advisers and underwriters to set an exact date and publish a prospectus for the listing.
FII is expected to launch an IPO on the Shanghai Stock Exchange at the end of this month or early next month to take advantage of an inclusion of yuan-denominated A-shares into global index provider MSCI Inc’s Emerging Markets Index later next month, analysts said.
The index is being closely watched by foreign institutional investors who are planning investments in emerging markets such as Shanghai.
FII is likely to set the listing price at 13.8 yuan, market sources said.
The company’s IPO application was submitted on Feb. 1 to the commission, which processed it on March 8 and granted its approval after only 36 days, catching the market off-guard, as the process usually takes about a year.
The quick review was an indication of China’s plan to lure high-tech firms, as it prepares to develop its technology and innovation sectors, dealers said.
However, the commission did not issue its official approval for the listing until Friday last week, because the IPO would absorb too much funding from the market based on FII’s original plan to raise 27.25 billion yuan (US$4.3 billion), Chinese media said on Saturday.
Reporters said it was possible that FII would agree to lower its goal in order to obtain official approval.
Hon Hai is expected to retain a 85 percent stake in FII after the IPO, the original prospectus showed.
FII’s investment in China is to focus on a wide range of new technologies, such as cloud-based computing, high-performance computing, 5G Internet communication solutions for industry, data centers and smartphone-related applications, Hon Hai said.
The listing would allow FII to tap the rapid growth of the Internet communication and cloud-based computing industries in China, Hon Hai said.
FII posted 15.87 billion yuan in net profit for last year, up 10.45 percent from a year earlier, while its sales grew 30 percent year-on-year to 354.54 billion yuan.
Its prospectus shows that its major clients include Amazon.com Inc, Apple Inc, Dell Inc, Arris International PLC, Huawei Technologies Co (華為) and Lenovo Group Ltd (聯想).
The top five clients accounted for more than 70 percent of FII’s revenue, the prospectus showed.
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