BYD Semiconductor IPO postponed pending probe by Chinese regulator

23 Aug 2021

A BYD Han electric sedan. Image: Jengtingchen via Wikimedia Commons

The law firm overseeing the Shenzhen listing is facing an investigation for unspecified reasons as the country’s tech crackdown continues.

Chinese electric vehicle maker BYD was forced to suspend its plan to publicly list its chipmaking division due to a regulatory investigation.

BYD Semiconductor was accepted in June for review of its IPO on Shenzhen’s ChiNext market, having applied in May. The company reportedly was seeking to raise more than 2.68bn yuan ($413m).

However, the law firm advising the listing is now the subject of a probe by the China Securities Regulatory Commission (CSRC) for unspecified reasons. The firm, Beijing’s Tian Yuan Law Office, is described by Nikkei Asia as one of China’s largest legal service advisers, having advised on numerous other big IPOs.

The Shenzhen Stock Exchange said in recent days that it needed to suspend the review of BYD Semiconductor’s public listing due to the Tian Yuan probe.

Several other IPOs across China are also reportedly on hold pending investigations into involved law firms, securities companies and accountant firms. The scope and purpose of the range of probes remains unclear.

BYD is China’s largest carmaker by market capitalisation and its semiconductor division is the country’s biggest manufacturer of microcontrollers for cars. The company’s investors include Warren Buffett’s Berkshire Hathaway, the Vanguard Group and BlackRock.

It revealed plans earlier in the year to spin off its chip unit as the global semiconductor shortage continues to affect the automotive market.

Nikkei Asia quoted a “venture capital source familiar with the IPO process in China” as saying that BYD Semiconductor’s listing has not been cancelled but “could be delayed by several months”.

BYD’s news is the latest story in China’s tech crackdown. Ride-hailing app Didi Chuxing was torpedoed just days after a successful New York IPO in late June, while Ant Group had its November 2020 Shanghai IPO cancelled entirely.

Increased regulatory activity is affecting investor confidence. Last week, Tencent Music saw its share price slip even as it posted impressive Q2 financial results.

A BYD Han sedan. Image: Jengtingchen via Wikimedia Commons (CC BY-SA 4.0)

Jack Kennedy is a freelance journalist based in Dublin