D-share listing gathers pace

More than 10 companies, including auto and white goods manufacturers, have expressed their interest in seeking financing through D-share listing in Germany, according to sources.

"We have been in close contact with companies expressing their interest in issuing D-shares in Germany, but the current moves remain at a very early stage," said a person familiar with the matter, who wished to remain anonymous.

"Overall the government has significantly speeded up the pace of building rules and infrastructural construction related to issuing D-shares. On the other hand, the regulators have been very cautious in selecting companies for the first batch to launch initial public offerings in foreign markets, although the criteria does seem not so difficult to meet. They do not want to let down foreign investors," said the source, referring to the six standards for potential issuers published by the Shanghai Stock Exchange earlier last month.

The standards set a narrow criteria for the first batch of D-share issuers, limiting it to financially sound blue-chip companies which already have A-share listings.

So far only home appliance maker Qingdao Haier has announced its plan to list up to 460 million shares on the China Europe International Exchange, meaning that it is likely to become the first Chinese company to debut on the Frankfurt-based bourse.

The company needs to get approval from both the China Securities Regulatory Commission and the German Federal Financial Supervisory Authority before it makes its D-shares listing.

The CSRC accepted the application from the company on May 4, according to the commission's website.

Similar to H-shares in Hong Kong, D-shares are seen as the government's latest move to increase Chinese companies' financing channels following a number of efforts to increase their connection with overseas financial markets.

The venue is an ideal option for Chinese companies with future plans to expand their business in the European market, said a senior partner with law firm Denton's.

Ivan Chung, Moody's associate managing director, said: "Such a venue will help increase companies' reputation as they develop their business in the local market."

Nevertheless, to what extent it will attract investors remains to be seen, as a lack of liquidity in the offshore market and exchange rate risks are some of major uncertainties, according to Chung.