The Financial Supervisory Commission (FSC) is considering cornerstone investors in the nation’s initial public offerings (IPO) market to help start-ups.
Cornerstone investors usually invest a fixed amount or acquire a large stake in companies ahead of their IPO.
The announcement came yesterday after the Taiwan Stock Exchange (TWSE) in March relaxed IPO rules. The new regulations allow companies with a market value and annual revenue of at least NT$5 billion (US$161.31 million) each, or a market value surpassing NT$6 billion and annual revenue of more than NT$3 billion, to apply for share debuts. Such companies are no longer required to be profitable to list their shares.
However, no eligible companies have applied for an IPO since the rule change, TWSE president Chien Lih-chung (簡立忠) said in response to a question by Democratic Progressive Party (DPP) Legislator Shih Yi-fang (施義芳) at a question-and-answer session at the Legislative Yuan in Taipei.
The exchange believed electric scooter maker Gogoro Inc (睿能) would be eligible and apply to debut on the local stock market, Chien said.
Gogoro faced two hurdles, Chien said. The first was how it would price its shares and the second was that Gogoro had to secure cornerstone investments to complete an IPO, given the size of the potential debut.
A single investor can subscribe to a maximum of a 10 percent stake for such an IPO, but cornerstone investors and institutional investors — such as mutual funds or asset managers — usually take a much bigger portion, Securities and Futures Bureau director governing IPOs Kuo Chia-chun (郭佳君) told the Taipei Times by telephone.
FSC Chairman Wellington Koo (顧立雄) said that the commission would study the feasibility of further relaxing the rules to boost cornerstone investor participation in IPOs, which would help boost market confidence in eligible firms.
Other Asian nations have adopted such a mechanism, Koo said.
Cornerstone investors would have caps to their stakes if the commission scraps the current restrictions, he said.
“If cornerstone investors have too great a stake, an IPO would be meaningless, as it could simply raise equivalent funds privately,” Koo said.
Representatives from Gogoro declined to comment yesterday.
DPP Legislator Julian Kuo (郭正亮) said he was worried that the local stock market is becoming marginalized among Asia’s main bourses, as only one IPO has reached NT$10 billion so far this year.
Koo said that this year has been better than last year, with more than 100 companies debuting.
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