Motivation and Performance of the Spin-off Listing of Shengyi Technology

Abstract

China Securities Regulatory Commission issued Several Provisions on the Pilot Project of domestic listing of the spin-off subsidiaries of listed companies in December, 2019, which was an important milestone for capital market in China. Before this provision was released, domestic listed companies who planned to conduct equity carve-out had to go list on Foreign Exchange. Since Shengyi Technology was the first listed parent company conducting equity carve-out after the announcement, citing the spin-off listing of Shengyi Technology as an example may enrich the research on the equity carve-out in China and provide suggestions for companies with similar plans. This paper adopts case study method, briefly summarizing the results of the current liteture and then analyzing the motivation and financial performance of Shengyi Technology. Then, this study draws a conclusion, finding policy support, coping with copetition, raising money and focusing on core business were the key motivations, and that equity carve-out had a positive impact on the performance of Shengyi Technology in the short term.