IPO/Fund Raising

IPO & Fund Raising lastest financial news from China

IPOs: China Biotechs Abandon New York for Hong Kong

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Bottom line: Two biotech firms’ abandonment of New York IPOs for Hong Kong is part of a broader trend to make Hong Kong and China more competitive for high-growth startups, and could ultimately boost valuations in all three markets.

Pharma startups abandon New York for HK

We’ll take a break from all the trade war talk as we close out the week and instead turn to another major development taking place in Hong Kong, where the local stock exchange has just rolled out some reforms with major implications for high-growth startups. Those reforms have reportedly netted a couple of biotech firms that were originally planning to list in New York, reflecting a potential new rivalry between these two markets.

Before the reforms, Hong Kong’s stock exchange was quite traditional and also strict about a few things, including dual-class partnership structures and profitability. The former British colony refused to allow dual-class partnerships that gave disproportionate power to holders of a special class of preferential shares. At the same time, it also had strict rules saying all companies must show three consecutive years of profitability before listing. Read Full Post…

STOCKS: Lenovo, China Telecom Mull CDR Homecomings

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Bottom line:  Hong Kong-listed “Red chip” stocks like Lenovo and China Telecom could eventually make secondary listings in China under a new CDR program, but will be forced to wait behind higher-profile Internet names like Alibaba.

‘Red chips’ eye China listings under CDR program

With all of the major IPOs for the week now in the history books, as most of the world takes a vacation for Good Friday, I thought I’d close out the week here in China with yet another angle on the China Depositary Receipt (CDR) program that is creating lots of buzz. Regular readers will know this is a reference to China’s planned take on the popular American Depositary Receipt (ADR) program that lets companies with a primary listing in one market make secondary listings in another one.

Lots has been written these last couple of weeks about how the CDR program could let U.S.- and Hong Kong-listed tech giants like Alibaba (NYSE: BABA) and Tencent (HKEx: 700) make new secondary listings in China, which they couldn’t do before. But today we’re getting the first few peeps about similar homecomings from top executives of a group of Hong Kong-listed companies known as “red chips”, which are major Chinese firms that are currently barred from listing at home. Read Full Post…

IPOs: Greentree Sags in Debut, as iQiyi and Bilibili Line Up

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Bottom line: Bilibili and iQiyi are likely to price in the middle of their ranges and debut flat to up slightly when their IPO shares start trading this week in the US.

iQiyi, Bilibili set for weak debuts?

This week is shaping up as one of the busiest I can recall for New York IPOs by Chinese firms, with at least four major listings set to take place. The first of those sputtered out of the gate on Tuesday, with hotel operator Greentree (NYSE: GHG) dropping 7 percent in its trading debut after pricing weakly and slashing the size of its offering. That less-than-stellar showing comes just days after another non-tech offering fizzled with the new listing of education specialist Sunlands (NYSE: STG) late last week.

Those weak signals could bode poorly for the three more IPOs set to take place later this week, including a launch for online video sites Bilibili and iQiyi on Wednesday and Thursday, the latter of which could raise more than $2 billion. In between that pair will be another education firm, OneSmart, which is set to debut on Wednesday. Read Full Post…

IPOs: iQiyi, Bilibili Juice Up Fund-Raising Targets

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Bottom line: iQiyi and Bilibili should price near the top of their higher IPO price ranges, as each benefits from strong investor sentiment fueled by their unique offerings and a potential new plan to concurrently list their shares in China. 

iQiyi, Bilibili capitlize on strong positions in video

Anyone who was worried that a regulatory crackdown on fintechs late last year might dampen broader enthusiasm for Chinese stocks can relax. That’s my key takeaway from the latest headlines, which show that two non-fintech Internet firms are experiencing stronger-than-expected demand for their upcoming listings in New York.

Leading that charge is Baidu-backed (Nasdaq: BIDU) online video site iQiyi, which has sharply jacked up the fund-raising target for its proposed New York listing by a massive 80 percent, in what could well be the biggest such listing by a Chinese firm this year. At the same time, the smaller but similarly high-profile Bilibili has jacked up its own fund-raising target by a hefty 50 percent. Read Full Post…

STOCKS: China Eyes Quick Route Home for Offshore-Listed Firms

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Bottom line: A new plan allowing offshore listed Chinese firms like Alibaba and Tencent to make secondary listings at home appears to have momentum and could stand a better than 50 percent chance of success.

China eyes new plan to bring home NY-, HK-listed firms

A mix of politics and business is in the air this week, as the annual National People’s Congress takes place in Beijing, including a concurrent gathering of business leaders who advise the nation’s legislature. Those leaders include most of the country’s leading high-tech CEOs, who are all getting peppered with questions about whether they would re-list at home if given the chance.

Most of those leaders are doing the politically correct thing and saying “of course,” including chiefs of Internet giants Baidu (Nasdaq: BIDU), Tencent (HKEx; 700) and Ctrip (Nasdaq: CTRP), just to name a few. (Chinese article) Such talk is really a bit cheap and would be quite impractical in the current market, since de-listing such massive firms from their current markets would require tens of billions of dollars in most cases, and even hundreds of billions in the case of a massive company like Tencent. Read Full Post…

IPOs: Redlands Shines Spotlight on Education, Low-Tech Listing Pipeline

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Bottom line: New listing plans by education firm Redlands and steel-trading platform Zhaogang point to lower-tech offshore IPOs taking center stage in the first half of the year until the situation for fintech candidates stabilizes.

Redlands sees riches in professional education

With fintech offerings in a holding pattern, a stream of lower-tech IPOs are finding their way to market in the first few months of this year. The latest of those is education company Redlands, which has just filed to sell up to $300 million worth of stock in a New York listing. At the same time another lower-tech offering, a steel-trading platform called Zhaogang, is also in the headlines, with media reporting it is gearing up for a Hong Kong listing that could raise up to $500 million.

It’s hard to spot a trend from just two offerings, but these deals do have a particularly low-tech bent to them. That’s probably at least partly because many of the higher-tech offerings in the current market, which were coming from financial technology firms, or fintech, are on hold at the moment due to regulatory uncertainty. That said, education does seem to be a flavor of the moment, at least in part because many of the companies going to market have found ways to quickly scale-up their business using online models. Read Full Post…

SMARTPHONES: Xiaomi Wins India, Makes First Visit to Top Trade Show

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Bottom line: Xiaomi’s taking of the India smartphone crown and attendance at a major trade show next week are aimed at boosting its profile in the run-up to its IPO. 

Xiaomi to attend MWC

Hype is building in the run-up to what’s likely to be one of the largest high-tech IPOs this year, with word that smartphone maker Xiaomi has snatched the India crown from a fading Samsung (Seoul: 005930) and is also making its first visit to the world’s top telecoms trade show next week. Both events are important milestones for a resurgent Xiaomi, as it attempts to boost its profile for a public listing that’s likely to raise in the neighborhood of $10 billion in Hong Kong.

At the same time, the list of attendees for this year’s Mobile World Congress taking place next week in Spain is also notable for a number of brands that have purchased booths in the past but aren’t doing so this year.  Leading that list is Oppo, which briefly took the China smartphone crown last year from current leader Huawei.  Also absent from the list are past attendees including Meizu and Gionee. That probably speaks to the fact that some of these brands are feeling the squeeze of prolonged competition in the space, and are choosing to spend their limited marketing budgets elsewhere. Read Full Post…

IPO: Xiaomi Partner Huami Defies Market in Trading Debut

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Bottom line: A relatively solid debut for wristband maker Huami bodes well for offshore Chinese IPOs outside the financial services sector, including for smartphone giant Xiaomi.

High-tech wristband maker Huami posts modest gain in debut

Different people are putting different spins on the trading debut for the first major Chinese IPO in New York this year, for a company called Huami, which makes fitness trackers and rose 2.3 percent on its first day. From my perspective, this looks like a gravity-defying debut, since the broader market tanked on that same day, with most of the major indexes down around 4 percent in the week’s second major major sell-off.

From a broader perspective, this seems to bode well for offshore Chinese IPOs in the year ahead, at least for those that are in safer sectors like this. Companies from the more volatile fintech sector, which has been the subject of repeated regulation to rein in the sector, could be in for a tougher ride. But this kind of more consumer-related product, which is far less controversial, could enjoy some success on positive sentiment about the broader China consumer market. Read Full Post…

FINANCE: Ant Financial Crawls Back Into Bed with Alibaba

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Bottom line: Alibaba’s purchase of 33 percent of Ant Financial looks like a shrewd move for both firms, making Ant more attractive in the run-up to an IPO likely to be one of the world’s biggest this year.

Alibaba and Ant back together

In what looks like a homecoming of sorts, e-commerce giant Alibaba (NYSE: BABA) has just announced it is taking back a major stake in its Ant Financial affiliate. Followers of this pair will know they have quite a long and complex relationship, and were actually once part of the same company. But they were split apart around a decade ago for political reasons, which apparently aren’t an issue anymore.

The other major plank to this story is Ant’s own story, including the unusual way in which this deal was structured. The company, whose core asset is the popular Alipay electronic payments service, is gearing up for what could be one of the biggest fintech IPOs of this year, likely to raise several billion dollars in Hong Kong. Thus this particular move could be designed to draw more attention to this lesser-known Alibaba offspring, and also to relieve it of some of its financial burden in the run-up to that offering. Read Full Post…

INTERNET: Meituan Aims at Didi with Drive Into Car-Sharing

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Bottom line: Meituan’s move into shared car services is likely to reignite a price war with incumbent Didi, and could be aimed at generating excitement ahead of a mega-IPO later this year. 

Meituan entering shared cars

Just days after reports emerged that car-sharing giant Didi Chuxing would pedal into the shared bike market, new reports are saying that group buying giant Meituan-Dianping is driving into Didi’s own shared car services space. These two stories underscore a theme that comes up time and again in the China tech world, whereby cash-rich companies often pile into hot and trendy sectors where they have little or no experience.

In this case the Meituan move has interesting implications because it could restart a fierce price war that was finally resolved last year when Didi merged with Uber China to take on its current form. Didi has pretty much owned the market since then, though it still faces some competition at various local levels. Now all that could change with the entry of Meituan, which should be flush with cash to launch yet a new round of price wars. Read Full Post…

BUYOUTS: eHi Prepares to Drive Off, Jumei Bid Unravels

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Bottom line: A third-party buyout offer for eHi could presage a wave of similar new bids for undervalued, profitable Chinese companies, while withdrawal of Jumei’s buyout bid could be followed by a new, lower offer.

eHi gets buyout offer

After a period of relative quiet, the privatization wave that swept US-listed Chinese companies nearly two years ago is bubbling back into the headlines with a couple of stories from different directions. In the “leaving” direction there’s car rental comp eHi Car Services (NYSE: EHIC), which has received a third-party offer to privatize for a slight premium to its latest stock price. In the other direction there’s cosmetics e-commerce firm Jumei International (NYSE: JMEI), which is finally withdrawing its management-led buyout offer nearly two years after first receiving the bid.

There’s no broader theme to these two deals, except perhaps that investors have become quite skeptical about such offers. The Jumei deal’s collapse shows why such skepticism is sometimes merited, though it’s also worth pointing out that about two-thirds of US-listed companies that announced plans to privatize during the wave in early 2015 actually completed those plans. Lackluster response to the eHi deal also shows a certain skepticism, probably because shareholders are still worried that many of these buyout bids are low-balling companies’ real values. Read Full Post…