IPOs: WeChat In Singapore, CICC Eyes HK

IPO Tuesday: WeChat, CICC and 500wan.com

I’m calling today “IPO Tuesday” because there are quite a few interesting news bits involving Chinese listing plans, led by an unexpected report that Internet giant Tencent (HKEx: 700) is eying Singapore for a listing for its popular WeChat mobile messaging service. That same report cites a source saying that Tencent itself eventually aims to complement its existing Hong Kong listing with a dual listing in New York — another unexpected twist for one of China’s most dynamic Internet companies. Meantime, China’s largest investment bank CICC is also making headlines with word of a listing plan, as Internet company 500wan.com moves ahead with its own New York IPO.

It’s hard to find a common theme in all this news, as the listings cover a wide range of markets and timelines. While Tencent and 500wan.com are both eying New York, WeChat is aiming for Singapore and CICC is most likely to list in either Hong Kong, China or both. What’s more, the WeChat plan looks very preliminary and probably wouldn’t happen until late 2014 at earliest. The 500wan.com plan looks set to happen this year, while the CICC plan looks likely in the next year. One of the few common threads is perhaps that premier Chinese names remain attractive IPO candidates, even when they’re money-losing companies like WeChat.

On that note, let’s start with a look at Tencent and WeChat, whose 2 listing plans came as a big surprise to me. Tencent later denied the report, though I suspect that at least some elements of it are true. Both plans were disclosed in a China Daily report citing an unnamed knowledgeable source. The actual fact that WeChat would want to list doesn’t come as a huge surprise, as rumors of a listing plan for the similarly popular Sina (Nasdaq: SINA) Weibo emerged just a year or so after the  Twitter-like service exploded in popularity back around 2010.

What does come as a bigger surprise is WeChat’s choice of Singapore for a listing, as the Singapore stock exchange isn’t host to many major Chinese companies and has a much lower profile than New York or Hong Kong. But the unnamed executive explains that Singapore was chosen because Hong Kong would be too complicated, since Tencent’s primary listing is already there. He adds that WeChat is focusing strongly on Southeast Asia as part of its global expansion, which makes Singapore a more natural choice for the listing. And in another big surprise, at least for me, the source also discloses that Tencent would ultimately like to make a second listing for the parent company on the Nasdaq, though that doesn’t look likely anytime too soon.

From Tencent, let’s move quickly to CICC, the former joint venture investment bank with Morgan Stanley (NYSE: MS) and the most active Chinese player outside its home market. The reports say CICC CEO Levin Zhu has commissioned a study to look at the possibility of an IPO, with Hong Kong and Shanghai as the most likely hosts. (English article; Chinese article) It’s clear from the reports that any such listing is still a ways off, though if things move quickly perhaps we could see something within a year. I would expect such a deal to be quite large, seeking to raise $1 billion or more.

Lastly let’s take a look at 500wan.com, a lottery website operator that I wrote about 2 weeks ago after media reported it wants to raise up to $150 million through a New York listing by year end. (previous post) The main update is news that 500wan.com has chosen Deutsche Bank and Stifel to underwrite the deal, indicating that the plan is moving forward. (Chinese article) Look for that one to come to market as soon as October, becoming only the second major Chinese listing in the US this year after a successful offering by e-commerce firm LightInTheBox (NYSE: LITB) in June.

Bottom line: Tencent’s plan to list WeChat in Singapore is a year or more away, while CICC’s plan for a Hong Kong or China listing could happen within a year.

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