(Yicai) April 12 -- The scale of China’s equity financing has narrowed by more than two-thirds so far this year after the government tightened supervision on the practice involving selling companies’ equities in return for capital.

Equity financing in the Chinese stock market plunged 70 percent to CNY122.6 billion (USD16.9 billion) this year as of yesterday from a year earlier, according to data provider Wind Information. Initial public offering proceeds also experienced the same decline.

Thirty-four companies completed IPOs in China in the period, securing CNY25.9 billion (USD3.6 billion), and other 57 listed firms conducted equity financings worth a total of CNY71.3 billion, Wind data also showed. The remaining CNY19.6 billion were raised through convertible bonds.

The main reason for these numbers is stricter regulatory measures, which led many companies to give up their equity financing projects this year. As of yesterday, 140 firms had given up their equity financing plans in China, 136 of them being voluntary. Among them, 106 companies had withdrawn IPO applications.

Another reason is that intermediary agency fees for IPOs have been surging this year. The average IPO issuance fee rate has increased to 11.4 percent this year from 10.8 percent last year, according to data from Hithink RoyalFlush Information Network.

Intermediary agencies are increasing financing investment to enhance the audit quality of IPO projects, an auditing industry insider told Yicai. If they do not, their audit quality and accuracy may not be enough, the insider added.

Moreover, intermediary agencies’ income has shrunk because of the contraction of the Chinese equity financing scale, so hiking fees is also way to stay afloat.

So far this year, listed Chinese intermediate agencies have borne CNY3 billion (USD410 million) in IPO and equity issuance costs for 91 companies, compared with over CNY9.6 billion for 192 firms a year earlier, according to data from Hithink RoyalFlush.

Editors: Tang Shihua, Futura Costaglione