China Credit Stress Shines Spotlight on Private Stock Deals
- Companies have raised 321 billion yuan from deals this year
- Deals offer financing alternatives amid credit market concerns
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An increasingly popular fundraising tool in China is offering a potential lifeline for cash-strapped companies, as a string of high profile defaults tightens scrutiny of the country’s credit market.
Private share placements are booming after rules were relaxed in February, helping revive that form of equity financing. This year has seen 151 deals raise 321 billion yuan ($49 billion) as of Monday, the most since 2017, according to data compiled by Bloomberg. Private offerings have surpassed other equity-linked fundraising tools like public placements, rights issues and convertible bonds in volume. More than 500 private placements are in the pipeline, seeking to raise at least 709 billion yuan.