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With the slowdown in the pace of IPOs and the spring breeze to encourage mergers and acquisitions, many listed companies will look for mergers and acquisitions and turn to the group of companies that have terminated the IPO process. This kind of M&A can be described as a "two-way rush", on the one hand, listed companies need to develop and expand through M&A or transform their layout, and on the other hand, companies that terminate the IPO process are also looking for new ways to exit.

However, it should be noted that some companies terminate the IPO process not entirely because of too long "queuing", but because of the "suspicion of evading on-site random inspection". In the face of such targets, listed companies should conduct thorough due diligence and special explanations with an attitude of being responsible to their own shareholders; At the same time, it is also necessary for the regulatory side to "continue" the intensity of the review of the target IPO before withdrawal, sort out the assets to the end, and put forward higher requirements for relevant parties to provide evidence to solve the confusion of the market.

Such as the recent Yingjixin (688209. SH), which plans to acquire the control (58.53%) of Huimang Microelectronics (Shenzhen) Co., Ltd. (hereinafter referred to as "Huimang Microelectronics") through cash + convertible bonds + supporting financing.

Shimmer has experienced two IPO failures. The first time was accepted by the Science and Technology Innovation Board on December 22, 2021, but on January 24, 2022, it was announced that it would withdraw its initial offering and terminate the IPO, which lasted more than one month.

The market believes that at that time, Huimangwei withdrew the initial application, which was related to the on-site inspection. On January 7, 2022, the Securities Association of China organized and completed the lottery for the random inspection of the information disclosure quality of IPO enterprises, and a total of 187 companies participated in the lottery at that time, and 9 were selected, including Huimangwei.

Source: Securities and Futures Commission

The second time was in May 2023, when Huimang Micro Sprint GEM was accepted, but it lasted more than 7 months, and finally voluntarily withdrew the initial offering application at the beginning of 2024.

Subsequent disclosures from the website of the China Securities Regulatory Commission can be seen that there are many situations in Huimangwei, such as during the first IPO declaration, Huimang Micro has personal card receipts and expenditures, cash receipts and expenditures, and the original cashier's misappropriation of funds; After the withdrawal of Huimangwei's first IPO, its financial director "quickly resigned" in the second month, and the PMIC sales director subsequently left; During the second IPO filing period, the former CFO did not provide bank statements for the period.

What needs to be paid more attention is that before and after the two IPOs, the "authenticity of distribution income" of Huimang Micro has been questioned by the regulators, and in addition, "the adequacy of the provision for inventory price decline", "the accuracy of R&D investment accounting", "gross profit margin is different from that of peers", "production capacity guarantee" and other aspects have also been mentioned many times in the inquiry. These are the directions that Yingjixin needs to do due diligence. At present, Yingjixin is in a state of suspension, and the suspension time will not exceed 5 trading days from March 4.

Source: Exchange

Source: Exchange

According to the "Wu Qing: Striving to Create a New Situation of High-quality Development of the Capital Market" released on the website of the China Securities Regulatory Commission on February 1, in the future, "the coverage of on-site inspection and on-site supervision of newly declared enterprises for initial listing will be greatly increased from about 10% to no less than 1/3". From a statistical point of view, the withdrawal rate of IPO companies selected for on-site inspection is high, for example, 26 out of 34 companies in 2022, accounting for 76.47%, and 12 out of 17 companies selected in 2023, accounting for 70.59%.

Under the stricter on-site IPO inspections, there will be more and more companies that voluntarily withdraw their listing applications with the suspicion of "evading on-site spot checks", and if they all turn to listing through restructuring, the pressure on the receiver and the regulator to conduct due diligence and review will also be greater.

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