The race to make an IPO by China’s top 2 online group buying sites, Lashou and 55tuan, has officially begun, with Lashou taking the early lead by making the first public filing for an offering to raise up to $100 million. (English article; Chinese article) The only problem is, this is a race that could very well see neither player ever reach the finish line, as both companies are hemorrhaging cash and investors are very unlikely to show interest in either, regardless of how low the selling price. According to its first public IPO filing late last week, Lashou, which is trying to polish its image by adding a capital “S” and calling itself “LaShou”, lost a hefty 391 million yuan, or about $60 million, in the first half of this year. With competition incredibly fierce in China’s group buying space and all kinds of quality issues and a potential government crackdown looming (previous post), Lashou’s situation is unlikely to improve anytime soon. I previously received quite a few sarcastic complaints when I remarked that Lashou was forced to turn to a couple of “second-tier” investment banks, CICC and Nomura, for the offering after Goldman Sachs and Morgan Stanley resigned the account citing conflict of interest, amid reports that they were really dubious of Lashou’s accounting records. (previous post) Now we can add Barclays Capital to the list of Lashou underwriters, again underscoring my previous assertion as none of these underwriters is a major New York bank with strong connections in the US and experience in the Internet space. 55tuan has also reportedly hired underwriters for its offering, though no one is quite sure who they are and no doubt they are even less experienced than Lashou’s trio of banks. Despite that, 55tuan came out very publicly and said earlier this month it plans to make an IPO by the end of this year, even as it was implementing mass layoffs. (previous post) All that said, there probably won’t be any winner in this newest IPO race, as whoever makes it to market first will probably have to sell their shares at a steep bargain to attract any investor interest. At the end of the day, I wouldn’t be surprised if neither company makes it to market at all, at least not by the end of this year.
Bottom line: The latest race to market between online group buying leaders Lashou and 55tuan is likely to yield no winners, as investors give chilly receptions to both struggling companies.
Related postings 相关文章:
◙ 55tuan: A Company in Denial 窝窝团拒不接受现实
◙ Lashou Ropes in Small Potatoes For US IPO 拉手网聘二流承销商赴美上市
◙ Group Buying Turmoil Grows With 55tuan Layoffs 窝窝团撤站裁员 团购业整合在即
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