Consulting firms eye China's IPO opportunities

Global risk and business consulting firms such as Protiviti are eyeing China's IPO market for significant new business opportunities, especially at a time when the country has just launched ChiNext, its NASDAQ-style trading board.

"The IPO market is a big market that affects our business," said Joseph Tarantino, CEO of Protiviti, a US-based business consulting and internal audit firm.

"We are seeing some significant new business opportunities that are coming from new transactions taking place," Tarantino said.

Protiviti is working with a number of companies that are preparing themselves to become public companies in helping them institute good risk management and corporate governance, and establish an internal audit function, Tarantino said.

China reopened its IPO market in June after a 10-month halt due to the widespread global credit crunch.

Although the market declined last year with the plunging stock markets, the country led the world in IPOs with 127 deals raising $17.9 billion, according to Ernst & Young.

To create more market liquidity and provide small and medium-sized enterprises more access to capital, the country has also launched the growth enterprise board ChiNext for startup companies to raise capital.

Protiviti is paying attention to China's new trading board, although it has yet to cooperate with any of the ChiNext companies.

Tarantino said one of the biggest challenges facing the listed companies is to establish a level confidence in the market and to build the fundamentals of the business that could be sustainable for investors.

"We see when some of the issues first go on the market, there is a very significant increase in stock price, and the question is whether or not the fundamentals of the business actually support the prices that the market is creating for those organizations," Tarantino said.

"It is important that they establish a level of confidence in the market and build the infrastructure that supports being a public company and creates a level of expectations to the market that can be managed," he added.

China has become the largest market outside the United States for Protiviti, which has seen double-digit business growth in the country since it entered the market six years ago.

"And it will be one of the important countries for Protiviti to achieve fast growth in the future," said Chris Low, president of Protiviti Greater China.

Although Protiviti is a growing company with just seven years of history, it has successfully helped Chinese enterprises such as Baidu.com and Suntech Power go public in foreign financial markets. So far, it has established representative offices in Beijing, Shanghai, Shenzhen and Hong Kong.

(China Daily 11/16/2009 page5)