Jcon Building Technology Becomes China’s First Startup to Issue Convertible Bonds in Private Placement

Jcon Building Technology Becomes China’s First Startup to Issue Convertible Bonds in Private Placement

Dou Shicong

Date: Mon, 10/16/2017 - 19:37 / source:Yicai
Jcon Building Technology Becomes China’s First Startup to Issue Convertible Bonds in Private Placement
Jcon Building Technology Becomes China’s First Startup to Issue Convertible Bonds in Private Placement

(Yicai Global) Oct. 16 -- Suzhou Jcon Building Technology Co. has issued a convertible bond on the Shanghai Stock Exchange, making it the first Chinese startup to offer C-bonds via a private placement.

The size of the issuance was USD1.61 million (CNY10.6 million), and bondholders will be able to convert the bonds to equity six months later, with the initial conversion price set at USD0.81 per share.

The Jiangsu-based firm needs financing to back its rapidly-expanding business operations, said the underwriter, Soochow Securities Co. [SHA:601555]. Compared with other types of bonds issued by startups, convertible bonds can reduce financing costs by about 3 percent, state-run Xinhua news agency reported today.

Privately-offered convertible bonds are one of the bond financing channels available for startups in China. They allow investors to convert bonds to shares during a certain period after bond issuance. They have proven effective in creating a strong connection between investors and issuers and offer startups a new source of funding to finance mergers and acquisitions, stimulating equity investment activities.

The China Securities Regulatory Commission has been promoting corporate bond offerings for startups since last year. Some 18 startups’ corporate bonds worth USD365 million were issued in Shanghai and Shenzhen as of the end of last month, and 11 of them were listed on the Shanghai Stock Exchange, with a total worth of USD228.1 million.

In line with its commitment to effectively support high-tech high-growth enterprises and the real economy through financial services, the Shanghai Stock Exchange will continue to improve supporting measures for the privately-offered bond market, and step up project development to build a pipeline of startup bond projects.

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Keywords: MSCI, Soochow Securities, Shanghai Stock Exchange, Convertible Bond