Baidu, NetEase finalize sponsors for CDRs ahead of domestic listing

China's another two US-listed companies — Baidu Inc and NetEase Inc — have nailed down their sponsors for Chinese Depositary Receipts (CDRs), Caixin reported on Wednesday, adding that Baidu is expected to come back to the A-share market in June, along with Alibaba and JD.

The financial media outlet citing people familiar with the matter said that Baidu will be sponsored by Huatai Securities, while CITIC Securities and Huatai Securities will be sponsors for NetEase. The two tech firms are now listed on NASDAQ in New York.

CDRs, similar to American depositary receipts, are certificates that allow investors to hold shares listed across borders. A string of CDR-related programs and draft rules have been announced in the past a few months.

China plans to woo overseas listed Chinese firms, especially major tech companies, back to the domestic A-share market with the introduction of the CDR system, according to Yan Qingmin, vice-chairman of the China Securities Regulatory Commission.

China Securities Depository and Clearing Corporation released a draft with specific focus on CDRs registration, depository and clearing operations on Monday. The public have until June 1 to comment on the draft rules. Earlier this month, China Securities Regulatory Commission sought public opinions until June 3 for draft rules on CDRs, with detailed procedures and information disclosure requirements.

Also, at the end of March, China announced a pilot program to support innovative companies' domestic listing and issuance of CDRs, involving companies in high-tech or strategic emerging industries such as internet, big data, cloud computing, artificial intelligence, software and integrated circuit, as well as high-end equipment manufacturing and biological medicine.

According to earlier report by Caixin, Tencent, Baidu, Alibaba, JD, Ctrip, Weibo, NetEase and Sunny Optical will be the first batch to issue CDRs.

Back in March, a report by tech.163.com, NetEase's online news portal, said that Baidu will issue CDRs in June. But the company did not confirm the report.

And during the nation's annual two sessions, Robin Li, chairman of Baidu, said that he was hopeful that his company would be able to list on the domestic stock exchanges as its major users and markets are in China, and it would be ideal if the major shareholders also are in China.

"Whenever the policy allows Baidu to come back, we certainly hope that we can return to the domestic stock market as soon as possible," Li added.

At the same time, Ding Lei, CEO of NetEase Inc, told Shanghai Securities News during the two sessions that "We will certainly consider returning to the A-share market".

Baidu's financial results for the first quarter showed its total revenue increased 31 percent year-on-year to 20.9 billion yuan ($3.33 billion), and NetEase reported a net revenue of 14.2 billion yuan ($2.3 billion), up 3.9 percent during the same period.