China will strengthen its supervision over initial public offerings (IPOs), the securities regulator said late on Sunday, two days after a small drug maker postponed its share sale saying it was “too big”.
The China Securities Regulatory Commission (CSRC), which had promised a more hands-off approach to IPOs after resuming them earlier this month following a 15-month hiatus, said it will step up monitoring of the deals and their pricing.
The regulator said in a statement posted on its website it will make random inspections on the procedures of book-building and roadshows.
The statement comes after Jiangsu Aosaikang Pharmaceutical Co Ltd said on Friday it had delayed its IPO after pricing it at 72.99 yuan ($12.06) per share, equivalent to 67 times its 2012 net profit.
The average PE ratio of pharmaceutical companies listed on Shenzhen’s Nasdaq-style ChiNext is 55.31, according to the state-run Shanghai Securities Journal.
The CSRC denied it had forced Jiangsu Aosaikang Pharmaceutical to halt its IPO, saying the decision was made by the company and the underwriter, China International Capital Corp. But sources familiar with the matter had earlier told Thomson Reuters publication IFR that the regulator had pressured the drug maker to postpone.
