I wasn’t too surprised to read that online entertainment firm Shanda Interactive has refiled to make a New York IPO for its Cloudary online literature unit, which it had to postpone last summer after market sentiment tanked amid a series of accounting scandals at US-listed Chinese companies. (Chinese article) What’s more intriguing is another report saying that Bank of America’s (NYSE: BAC) Merrill Lynch unit, one of the original underwriters, has resigned from the case, and has been replaced by CICC, China’s leading investment bank. (Chinese article) Of course it’s difficult to interpret too much from this kind of development, but we saw similar resignations in several cases last year, most notably from leading group buying site LaShou, after the original investment banks on the offering reportedly had strong reservations about accounting practices at those companies. Shanda Cloudary’s case could be slightly different, as the media reports say the other underwriter, Goldman Sachs (NYSE: GS), is still on the deal, and it’s common knowledge that Merrill Lynch has gone through quite a bit of turmoil since its hasty acquisition by Bank of America at the height of the global financial crisis in 2008. So let’s take a quick look at this deal, which becomes the third New York IPO filing for a Chinese company this year, following previous applications by car leasing firm China Auto (previous post) and Internet e-commerce firm Vipshop. (previous post) Media reports indicate that Shanda hopes to raise up to $200 million in the offering for a literature unit whose revenue rose 78 percent last year to 700 million yuan, or just over $100 million. But the unit is still losing money, posting a net loss of 36 million yuan, marking the second consecutive year of narrowing losses. Fierce competition on China’s Internet has meant that many companies are now losing money, with even formerly profitable e-commerce leader Dangdang (NYSE: DANG) reporting a rapidly widening quarterly loss last week. (previous post) Online literature is a hot area, and Shanda was one of the earlier players in the space, meaning it’s quite possible Cloudary could become profitable in the next year or 2 if competition doesn’t get overheated. But I do sense that Shanda is hurrying this offer before the timing is ideal, probably to raise funds to help pay for the $700 million privatization of the parent company, Shanda Interactive, that just wrapped up earlier this month. Taking everything into account, I would look for this new offering to finally make it to market in the next few weeks, unlike the Vipshop offering which is likely to run into trouble. But even if it does get to market, look for a cool investor reception and a flat to negative trading debut for the stock.
Bottom line: Shanda’s revived IPO for its online literature unit is likely to make it to market, but will meet with cool to negative investor sentiment on its trading debut.
Related postings 相关文章:
◙ Shanda Delists: Thanks for the Profits 盛大网络退市：获利可喜
I have to admire the determination Universal Studios, the theme park arm of Comcast’s (NYSE: CMCSA) NBC Universal, which, after 2 failed attempts to set up theme parks in China is making yet another bid to enter the market in the northeast port city of Tianjin. (
Apple (Nasdaq: AAPL) has finally won a round in its ongoing legal dispute over use of the iPad name in China, reflecting both a potential turning point in its ongoing spat with a Taiwan-linked company called Proview and also suggesting that justice may finally be coming in this convoluted case that is testing China’s fledgling court system. Of course, some might say the win this week in a Shanghai courtroom may also reflect the entry of politics into this case that has captured global headlines, as government officials finally take steps to help Apple, which is clearly much more important to China’s economy than the financially struggling Proview. But from my viewpoint, this latest development is more about making sure that true justice happens, and that companies realize that they can’t use China’s inexperienced legal system to play the kinds of games that occur elsewhere throughout the its business world. Let’s take a look at the actual new development, which has seen a Shanghai court rule that Apple can continue to sell its iPads in the city, one of China’s wealthiest and a much more important market than any of the smaller cities where iPads have been pulled from store shelves after a Shenzhen court ruled that Proview still owns the iPad trademark. (
The latest sign of trouble is emerging from China’s banking sector, where Minsheng Bank (HKEx: 1988; Shanghai: 600016), one of the nation’s more commercially-focused lenders, has just announced plans to raise up to $1.6 billion or more to bolster its shaky capital base, even as Beijing is encouraging banks to lend even more. Minsheng’s plan would see it issue new H-shares in Hong Kong, and could also see a convertible bond offering linked to its Shanghai-listed A-shares, according to a filing with the Hong Kong stock exchange. (
Dangdang (NYSE: DANG), China’s only major listed e-commerce site, has just released its latest quarterly results that show its losses ballooning, reflecting the overheated competition in the space that is already starting to hit many smaller companies and could soon even claim a bigger player. Dangdang’s latest report shows its loss jumped to 130 million yuan, or nearly $21 million, in the final quarter of last year, reversing a $2 million profit the previous year. (
After years of following the same tired old global banking names into and more recently out of China, it’s nice to suddenly see some refreshing new entries to this dynamic but also challenging financial services market. First there was an interesting tie-up last month that saw American Express (NYSE: AXP) investing in a Chinese mobile e-payments company called Lianlian (
There are some interesting new moves in China’s new and traditional media spaces, with Facebook, one of the industry’s youngest players, reportedly looking for young Chinese software programmers while the New York Times (NYSE: NYT), one of the oldest players, is taking a gamble on publishing in the market. Let’s take a look at Facebook first, as that’s the more interesting of the 2 developments as the company prepares for its highly anticipated multibillion-dollar New York IPO. Just last week I wrote that Facebook had registered a number of its trademarks in China (
While most of China’s top automakers are relying on partnerships with major global brands to help get them through a domestic downturn expected to last for the next 1-2 years, Geely (HKEx: 175) is taking an interesting approach by turning to the struggling Volvo, with plans for a new joint venture. (
The confidence crisis for US-listed China stocks has taken an interesting twist with the start of a bidding war for AsiaInfo-Linkage (Nasdaq: ASIA), one of the oldest US-listed China firms. The development underscores the fact that despite questionable accounting practices at many smaller US-listed Chinese firms, there are still many good companies in the market that may look like good values for buyers wanting to take advantage of depressed share prices that have resulted in cheap valuations. On the IPO front, meanwhile, a steady stream of noise from e-commerce giant 360Buy, which also goes by the name Jingdong Mall, indicates the company may be getting close to making its first public filing for a public offering that it first announced plans for last fall. Let’s look at AsiaInfo first, as the new bidding war could be the first in a new string of buyout offers for healthy US-listed Chinese firms whose shares have tumbled by 50 percent or more in the last year after a series of accounting scandals. Media are reporting that big-name US private equity firms including KKR and TPG are eying bids for AsiaInfo-Linkage that could value the company at $1 billion or more. (
