The Shanghai Stock Exchange said it would investigate Zhejiang King after the air conditioner maker halted its IPO amid reports of alleged problems such as overvaluation of shares.
The investigation comes as securities regulators tightened scrutiny of initial public offerings and slowed the pace of stock sales to revive a flagging market.
Zhejiang King said on Saturday it would suspend the offering originally scheduled for Monday due to media reports, without specifying the nature of those reports.
In a statement issued late Saturday in response to inquiries about the IPO, which raised allegations of inflated pricing and the company’s attempt to list the same assets twice, the Shanghai Stock Exchange said its the allegations are known and that they will initiate a targeted investigation.
Zhejiang King said in its prospectus released last month that assets related to its air conditioning business were acquired indirectly from a listed air conditioning company through a series of asset restructuring plans.
Zhejiang King said last month that it aimed to raise 2.38 billion yuan (2.55 billion Hong Kong dollars) at a price of 68.07 yuan per share.
The company priced its IPO at 51.29 times 2022 earnings, and its listed peers are trading at an average of 27.8 times earnings, according to the China Securities Index, Zhejiang King said in the prospectus.
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