Chinese regulatory scrutiny has come to haunt companies across sectors and the latest to suffer from the increased oversight is Warren Buffett-backed EV manufacturer BYD Company Limited (OTC: BYDDF).
What Happened: China's BYD is forced to suspend the proposed listing of its chip making arm due to a regulatory probe into the law firm advising the company, the Nikkei reported.
In May, BYD applied for listing its automotive microcontroller chip-making-unit on the Shenzhen Stock Exchange-supervised ChiNext, the report said. The company sought to raise $412 million from the offering.
Despite the IPO application receiving approval in June, the IPO plans are now put on hold. The development was attributed to an ongoing inquiry by the Chinese Security Regulatory Commission into Beijing Tian Yuan Law Firm, which is advising BYD on the IPO.
The Shenzhen Stock Exchange needed to suspend the review of such IPO plans due to the probe, the exchange said in a public notice posted over the weekend, according to the Nikkei. The Shenzhen Stock Exchange reportedly halted its review of BYD's application on Aug. 18.
Related Link: Nio, XPeng, Buffett-Backed BYD Among Top Quality EV Brands In China: Survey
Why It's Important: Chinese regulators began clamping down on high-profile tech names in a bid to rein in their market dominance. Alibaba Group Holding Limited (NYSE: BABA) was hit with an antitrust fine late last year. Later the ecommerce giant was forced to shelve IPO plans for its Ant Financial unit.
The regulatory net widened subsequently, with Internet technology giant Tencent Holdings Limited (OTC: TCEHY), DiDi Global Inc. (OTC: DIDI) and private tutoring companies all suffering from the increased scrutiny.
BYD's planned IPO may have provided its chip unit with resources to increase capacity at a time the world is grappling under a severe chip crunch.
Related Link: Buffett-Backed BYD To Supply Blade Batteries To Rival Tesla In 2022: Report
Photo: Courtesy of BYD Company Limited
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