When Listing Is Not An Option: How Offshore Processes Can Support A Successful Investor Exit Strategy

key takeaways

• Increased regulatory scrutiny in China and stricter listing requirements in the US have resulted in a reduction in the number of listings of Chinese companies (typically structured with a Cayman Islands, BVI or Bermudan listing vehicle) in the US. There are also reports of increased efforts to discourage the use of VIE structures and/or for existing VIE structures to be unwound.

• Practically, both these factors combined impact the ability of VC and PE investors to exit their investment. 

• The Cayman Islands, British Virgin Islands and Bermudan corporate and restructuring regimes offer established tools, including schemes of arrangement and mergers, to support solvent restructurings including corporate reorganisations and the unwinding of VIE structures.