The Shanghai Stock Exchange Building in the Lujiazui Financial District in Shanghai Photo: IC

The Shanghai Stock Exchange (SSE) said on Monday that it will investigate air-conditioning equipment maker Zhejiang Guoxiang Co Ltd after its IPO process has been suspended amid media reports over alleged issues such as “secondary listing for the same assets” and “deliberate overpricing”.

In a statement, the SSE introduced the pre-IPO review and regulatory situation of Zhejiang Guoxiang and said that it will organize a special investigation to address investor concerns. The exchange will decide whether to take subsequent actions based on the results of the special probe.

Zhejiang Guoxiang issued a filing on Saturday saying that the scheduled IPO subscription on Monday has been postponed over media reports of secondary listing of the same assets and high issuance price. Zhejiang Guoxiang is mainly engaged in the research, development, production, and sales of equipment for industrial and commercial centralized air conditioning.

The SSE said it attached great importance to the issues mentioned in the media ports and that it had reviewed and inquired about the key issues including issuance conditions, listing conditions, and information disclosure requirements, after recceing Zhejiang Guoxiang’s IPO application.

Regarding the “secondary listing”, the SSE said it has been aware that the assets of Zhejiang Guoxiang are related to the original listed company. But there have been substantial changes in its business, products, technology and research and development, personnel, sales model, controlling shareholder, and management team between the two. 

Regarding the listing standards, the SSE said Zhejiang Guoxiang meets the first set of listing standards for the index’s main board. 

The company priced its IPO at 68.07 yuan ($9.32) per share with a price-earnings ratio of 51.29 times, according to the SSE.

SSE said that under the registration-based system, the stock exchange has attached great importance to the interest of vast investors and imposed a strict review process for  IPOs.

The stock exchange will engage in a full-blown review based on an objective, professional, and fact-based manner and contribute to a transparent and vibrant capital market, it said.