CSRC gets first B-to-A proposal

Shanghai-listed Zhejiang Southeast Electric Power Co, one of China's electricity generators, has submitted an application with the China Securities Regulatory Commission (CSRC) to swap its US dollar-denominated B-shares for renminbi-denominated shares trading on the exchange's mainstream A-share board, a move which marks the first time a B-to-A plan has been filed with the securities regulator, the Shanghai Securities News reported Wednesday.

If the CSRC approves the company's filing, it could set an important precedent for other companies looking to exit the illiquid B-share market in addition to the B-to-H conversion route established late last year, experts told the Global Times.

First introduced in 1992, the mainland B-share markets - which allow for the trading of shares denominated in US dollars in Shanghai and Hong Kong dollars in Shenzhen - were originally intended to allow local companies to raise money from overseas investors.

However, after mainland authorities cleared domestic companies to list directly on foreign exchanges years later, B-shares lost much of their appeal for local businesses seeking to raise overseas capital, Cai Junyi, chief investment consultant from Shanghai Securities, told the Global Times.

Zhejiang Southeast Electric is one of several companies that have taken steps to leave the increasingly irrelevant market, yet all of the firms which have so far announced such intentions said they were aiming for a B-to-H conversion, encouraged by the success of China International Marine Containers, the first company to swap its Shenzhen-listed B-shares for H-shares for a spot on the Hong Kong market, said Cai.

However, due to different listing and price setting requirements which exist between the mainland and Hong Kong markets, B-to-A conversion could be an efficient alternative for some companies which wouldn't qualify for a B-to-H maneuver, Zhang Xin, an analyst from Guotai Junan Securities, told the Global Times.

In November, Zhejiang Southeast Electric suspended trading of its B-shares, a move it attributed to a corporate restructuring plan. On January 22, the company announced it will take down its ticker from the London Stock Exchange.