The Study About Enterprises’ Backdoor Listing:General View, Mode, Performance

There are two way to go public. One is the initial public offering（IPO）, anotherone is the backdoor listing. Backdoor listing is a special form of Mergers andAcquisitions. In21century, real estate industry flourished, becomed one of themainstay industries of the chinese economy. But the crisis hid behind the prosperity.Capital is so significant for the development of the real estate enterprises. It would behard to become stronger, if the real estate enterprises are incapable of financingcapacity. Bank loan is the major source of the real estate enterprises’ capital in China.The financing channel of real estate enterprises is quite simplex, and the financingsustainability is insufficiency. These are the mortal wounds of the development of thereal estate enterprises. Therefore, drowing support from the capital macket to get asustainable financing platform is the hope of the numerous real estate enterprises. Butin our country, macroscopic policy has a significant impact on the real estateenterprises. The government policies impose restrictions on the IPO of the real estateenterprises, thus a large amount of real estate enterprises go public by backdoorlisting.This article used descriptive statistics and case study to research the backdoorlisting of real estate enterprises（Up to December31,2011） in China. This articledescribed the time-to-market,the geographical distribution, the industry conditionsand the listing mode,and also analysed the financial characteristics of the shellcompany. Besides that, it explored the reason of backdoor listing. My research foundthat:2007to2009is the high-tide period of the real estate enterprises’ backdoorlisting; The acquiring enterprises mainly come from eastern developed regions,however, the shell compamies are evenly distributed; Most of shell companies arebelong to manufacturing industry, and present the charicteristics of small scale,poorfinancial conditions and operational difficulties; The listing mode is extremely diverse,the real estate enterprises usually choose the listing mode according to their ownconditions. Backdoor listing can make the real estate enterprises obtain funds,promote the brand, achieve the gains of the restructuring, etc. These are the mainmotivations that the real estate enterprises want to pursue for the backdoor listing.Based on the analysis of the real estate enterprises’ history and status quo, this article selected Jiakaicheng and Zhongzhugufen to research the operating methods,shot-term and long-term performance etc. The research found that: Jiakaichengadopted the mode that including clearing the shell company and issuing new shares topurchase asset. This mode accomplished transfer of controlling stake and assetinjection simutaneously. Zhongzhugufen adopted the mode that including cashacquisition of shares and the replacement of assets. This mode obtain the controllingstake first, and then inject the assets. The backdoor listing made the two enterprisesincreased shareholder value and enterprise value dramaticlly. By contrast,Jiakaichenggained better performance, that’s because it cleared all the asset and debt out of thelisted company.Based on the reseach and conclusion, I consider that if a real estate enterprisewant to be backdoor listing, it should not only give full consideration to their ownconditions and external environment, but also concern the sustainable developmentand financing innovation; Government department should improve and amend relatedpolicies to make a favorable policy environment.