China talks up support for IPOs. Investors are watching the speed of approval

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China’s top executive body, the State Council, late on Wednesday published high-level measures for “promoting the high-quality development of venture capital.” “Everything is going to depend on the implementing regulations,” said Marcia Ellis, global co-chair of private equity practice at Morrison Foerster. “Venture capital investors are not going to make investments unless they can see a reasonably clear path to an exit,” she said, noting that has not been case for the past year or so. A man walks a dog in the shade away from the midday sun past the New York Stock Exchange (NYSE) building in Manhattan, during hot weather in New York City, New York, U.S., August 11, 2020. Mike Segar | Reuters

BEIJING — Chinese authorities this week announced new policy for supporting venture capital, raising hopes for faster approvals of initial public offerings in the near future.

A once-burgeoning ecosystem of investment capital and startups in China has slowed drastically in the last three years amid increased regulatory scrutiny.

In one of the latest efforts to shore up the industry, China’s top executive body, the State Council, late on Wednesday published high-level measures for “promoting the high-quality development of venture capital.”

“Everything is going to depend on the implementing regulations,” said Marcia Ellis, global co-chair of private equity practice at Morrison Foerster.

“It’s positive the government at the central level has realized there is a problem,” Ellis said. “At least with respect to investments in technology, venture capital can be a positive force in the market in China that frankly can help China compete with the U.S. in the tech race.”

In terms of actions to watch, Ellis said that “really what we’re looking for as far as IPOs, is if the approvals start coming out at a quicker pace.”

“Venture capital investors are not going to make investments unless they can see a reasonably clear path to an exit,” she said, noting that has not been case for the past year or so.

The new policy included a section on expanding exit channels for venture capital, with an emphasis on supporting companies with technological breakthroughs. The measures also called for implementing a management system for overseas listings and smoothing the exit channels for venture capital funds not denominated

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