CSRC urges bankers to "like " Facebook

by Jack Bibey | Saturday, Apr 28, 2012 | 298 views

The  internet censors in China have a very murky opinion on Facebook , but that still hasn’t stopped them from considering at as a model of sorts for the securities regulators in the country.

The CSRC or the China Securities and Regulatory Commission in its training session last week  encouraged the IPO bankers  to take a leaf out of Facebook’s risk disclosures in its listing prospectus , according to the IFR report .

The points coming out of the meeting , show China’s determination to bring a transformation in the IPO system – in which the regulators have the power to decide on a company being fit or not to come into the market-  to a disclosure based  system where the investors are trusted with  taking risks and getting rewarded  if they  buy into a float.

After a series of volatile listings made the fund managers averse to new listings , which includes the Societe  Generale’s Chinese joint venture , the CSRC is working in the direction of restoring the confidence back in the IPO market.

There can’t  be a more unlikely contender than Facebook as far as the role models go. Facebook is banned in China and the “use of proceeds” statement present in the prospectus is unlikely to get it a listing approval if it were a Chinese firm. It’s a funny thing , that the regulator agencies are asking them to learn from a website which is not even accessible within China , said a banker.

Facebook recently announced that it plans to raise $ 5 billion in its IPO , which is simply the largest in the Silicon Valley and could take the market value of the social networking firm to $100 billion. Although the journey taking it to the public markets has been interrupted by the recent acquisitions spree that it has gone into .

The prospectus of the Social  networking firm has become a must have accessory in the investment banking sector after the two day trading session in Beijing. The CSRC has labeled the information and risk disclosures by facebook as full and tailor made . And that is how the regulators wish the domestic IPO sector should be . The regulatory agency which is trying to instill back the interest and faith back in the IPO market have been impressed by the forward looking and comprehensive approach mentioned in its prospectus. That is a thing they do not see in Chinese market where the sponsors or the issuers hide or try to avoid the risk factors while bidding approvals for the IPO’s .

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