Red-chip listings to provide a new private equity exit route

The opening of China's capital markets to foreign-registered companies will present private equity houses with a new exit strategy, through listing in so-called red-chip companies.

Red-chips (large, usually state-owned, enterprises which are incorporated outside mainland China and listed in Hong Kong), along with other foreign-incorporated companies, are not allowed to list in mainland China. But it has been rumoured for several months that this situation is about to change, and if it does, private equity investors will get access to an attractive asset.