DOMESTIC private equity (PE) firms have been temporarily barred from listing on the country’s biggest over-the-counter (OTC) equity exchange as regulators seek to ward off potential financial risks, sources with knowledge of the situation said.

    The ban would be a blow to CITIC Capital Holdings and other investment firms seeking a floatation on the New Third Board, an increasingly popular marketplace for private equity firms to raise capital and access wealthy individuals.

    The news was reported earlier yesterday by financial newspaper 21st Century Business Herald.

    Regulators are worried that funds raised by private equity firms via the OTC board are not used properly, one source said.

    “Such firms raised quite a lot of money and some used the proceeds to buy stocks, which is not good,” the source said.

    Local private equity firm China Science & Merchants Investment Management Group said in September that it plans to raise 30 billion yuan (US$4.63 billion) via the OTC board. The company has been actively buying shares in the secondary market.

    Beijing Tongchuang Jiuding Investment Management Co., also listed on the New Third Board, has already raised 10 billion yuan this year and plans to raise another 5.5 billion yuan over the next few months. (SD-Agencies)