JPMorgan drops another IPO in China

Sources say US securities regulators looking into bank’s hiring practises in China

JPMorgan Chase has stopped working on a Chinese firm's initial public offering (IPO) amid an investigation by US authorities into the bank's hiring practises in China, people with knowledge of the matter told Reuters yesterday.

It is the second time JPMorgan has stepped aside from a Chinese IPO candidate while US securities regulators look into whether the bank violated federal laws in hiring the relatives of current or potential clients with the sole purpose of winning business from them.

JPMorgan has ended its IPO discussions with Tianhe Chemicals, the people said, as the supplier of lubricating oil additives to refiners such as China Petroleum and PetroChina was trying to move ahead with a $1 billion deal. Thomson Reuters publication IFR said on Monday that Tianhe Chemicals hoped to launch the IPO in the second quarter of this year.

JPMorgan's exit was driven by concerns raised about the bank's employment of Joyce Wei, the daughter of Tianhe Chemicals chairman Qi Wei.

Hong Kong securities licence filings show that a Jiao Wei worked at JPMorgan from January 2012 to August 2013, and is now on the staff at UBS, joining the Swiss bank in October. Jiao is Joyce Wei's Chinese name, a person familiar with the matter told IFR, affirming also that she is Wei's daughter.

Another source said UBS is mandated to work on the Tianhe Chemicals IPO.

JPMorgan and UBS declined to comment. Efforts to reach Joyce Wei and Tianhe Chemicals were not successful.

JPMorgan had been discussing an overseas listing with privately-owned Tianhe since at least 2011, when IFR first reported the company planned to list in London. It is not clear whether Tianhe signed any formal letter of engagement before or after Wei joined JPMorgan. One source said yesterday the company – in which Morgan Stanley's Asia private equity unit invested $300 million for a minority stake in 2012 – planned to list in Hong Kong. – (Reuters)

READ MORE