UPDATE 1-JPMorgan drops another China IPO amid 'princeling' probe-sources
HONG KONG, Jan 21 (IFR/Reuters) - JPMorgan has stopped working on a Chinese firm's initial public offering amid an investigation by U.S. authorities into its hiring practises in China, people with direct knowledge of the matter told Reuters on Tuesday.
It is the second time the U.S. bank has stepped aside from a Chinese IPO candidate while U.S. securities regulators look into whether JPMorgan 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 company, which supplies lubricating oil additives to refiners such as China Petroleum and PetroChina, was trying to move ahead with an around $1 billion deal early this year. Thomson Reuters publication IFR said on Monday that Tianhe Chemicals hopes to launch the IPO in the second quarter.
JPMorgan's exit was driven by concerns raised about the bank's employment of Joyce Wei, the daughter of Tianhe Chemicals Chairman Qi Wei, IFR reported on Monday, citing sources.
Hong Kong securities license 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.
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.
The U.S. Securities and Exchange Commission (SEC) and the Department of Justice are investigating whether JPMorgan violated bribery laws by improperly hiring the relatives of well-connected Chinese officials. The investigation is ongoing and the bank has not been accused of any wrongdoing related to the case.
JPMorgan earlier withdrew from a syndicate of underwriters working on a $3 billion listing by China Everbright Bank Co, Reuters reported in November.