Research On The Motivation And Performance Of Equity Carve-Outs

With the further development of domestic capital market,the emergence of science and technology innovation board ushered in new opportunities for Chinese listed companies to split their subsidiaries and go public in China.In December 2019,China Securities Regulatory Commission(CSRC)issued relevant regulations,making clear provisions for spin-off listings on the Science and Technology Innovation Board.Spin-off and listing can enable enterprises to focus on their main business,broaden financing channels,and provide better fertile ground for the breeding and development of high-tech products.The policy of spin-off to the science and innovation board has set off a wave of spin-off of listed companies and stimulated the power of spin-off and listing of listed companies.Under the guidance of the new policy,MicroPort Endovascular Medtech,a subsidiary of MicroPort Scientific Corporation,took the lead in completing the spin-off and listing on the Science and Technology Innovation Board on July 22,2019.Since the establishment of China’s science and technology Innovation Board,MicroPort Endovascular Medtech is the first company to successfully complete the spin-off and go public on the science and technology Innovation Board.It’s also the first successful listing case from H-share spin-off to Science and Technology Innovation Board in China.This paper conducts an in-depth study on the motivation and effect of separating MicroPort Endovascular Medtech from MicroPort Scientific Corporation and listing it on the Science and innovation Board.First of all,the background of the medical device industry,the basic situation of the parent and subsidiary companies and the process of spin-off and listing are sorted out.Then,this paper analyzes the motivation of the case company from internal and external aspects.The internal motivation mainly includes four aspects:financing demand motivation,refocusing motivation,enterprise valuation motivation and management motivation.The external motivation includes the institution of the science and technology innovation board,that is,the listing conditions of the science and technology innovation board are more inclusive,and it is more suitable for enterprises to split and list on the science and technology innovation board.Another external motivation is the higher market valuation of the science and Technology Innovation Board.In the next chapter,the author analyzes the specific effects of spin-off listing,using event study method and combined with tobin Q value of the company’s market performance is analyzed,using the financial index analysis method to analyzes the financial performance of the subsidiary company,and combined with the balanced scorecard of parent-subsidiary non-financial performance is analyzed respectively,the spin-off effect are analyzed.In summary,the conclusion is put forward from many aspects,and reasonable suggestions are put forward for parent and subsidiary companies and regulatory authorities from the enterprise level and regulatory level respectively.