Bottom line: The securities regulator should start signaling it will end its latest IPO freeze as soon as current market volatility subsides to demonstrate China’s commitment to capital market liberalization.
CSRC should signal IPO ban to end soon
Reports of 2 new listing plans by Chinese companies were in the headlines last week, showing executives hope to resume their fund-raising using capital markets once the current market volatility ends. One headline saw outdoor advertising specialist Focus Media disclose a new plan to list via a backdoor offering in Shenzhen, while the other saw media report that snack giant Liwayway Holdings was taking initial steps for a $200 million IPO in Hong Kong.
Stock market fund-raising by Chinese companies has come to a standstill over the last 2 months, after a rout that began in June frightened off investors and prompted the China Securities Regulatory Commission (CSRC) to suspend all new offerings in a bid to stabilize the situation. This resumption of offering activity is still in the very early stages, and reflects the important role that financial markets play for companies in need of capital to fund their operations. Read Full Post…
Bottom line: Focus Media’s latest backdoor listing plan could stand a 50-50 chance of success, and should come as a warning of the difficulties that may face many other US-listed Chinese firms hoping to privatize and re-list in China.
Focus Media in new backdoor listing plan
You have to admire the persistence of Focus Media, the outdoor advertising specialist that’s trying to blaze a new homecoming trail for US-listed Chinese firms trying to privatize and re-list in China to get higher valuations. More than 2 years after leaving the Nasdaq and one failed re-listing attempt in Shenzhen, Focus is trying again with a new plan for a backdoor listing via a Shenzhen-listed shell company called Hedy Holdings (Shenzhen: 002027).
I’m actually being just slightly facetious in admiring Focus for its persistence, since it really has very few other options in this case. Big investors including US private equity giant Carlyle put up billions of dollars to help Focus de-list in 2013, and now they’re simply looking to recoup their investments and hopefully make some profits by re-listing the company at a higher valuation in China. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 1. To view a full article or story, click on the link next to the headline.
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Micron (Nasdaq: MU) Deal in Suspense as Unigroup Exec Returns Home (Chinese article)
Focus Media Aims to Relist Via Hedy (Shenzhen: 002027) Acquisition (English article)
Internet Entrepreneurs Back Chinese Tesla (Nasdaq: TSLA) Rival NextEV (English article)
Front-Line Research Shows Many Buyers Returning Xiaomi’s Redmi Note (Chinese article)
Ageas to Sell Hong Kong Unit to China’s JD Capital for $1.4 Bln (English article)
Bottom line: Focus Media will re-list with a high valuation on a new enterprise-style board set to launch in Shanghai next year, while China Renaissance’s new fund to help US-listed firms privatize will attract strong investor interest.
Focus Media changes IPO re-listing plan
A couple of items are in the news involving the recent buyout wave for US-listed Chinese companies, which are rapidly abandoning New York in search of higher valuations in their home market. In an abrupt and somewhat surprising shift, Focus Media, one of the first companies in this homecoming wave, is reportedly abandoning its original plan for Shanghai.
The second item has China Renaissance, a well-respected domestic private equity firm, preparing to raise a major new fund that will help to finance privatizations of Chinese firms from New York. This particular deal looks significant, since many of the nearly 3 dozens firms to announce privatization plans this year could soon need new funding if previous commitments collapse due to recent volatility in China’s domestic stock markets. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 31. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU) Announces $1 Bln Share Repurchase Program (PRNewswire)
Focus Media May Drop Backdoor Listing, Eyes New Strategic Industries Board (Chinese article)
Wine E-tailer Jiuxian Lands 500 Mln Yuan Series G Funding (English article)
China Renaissance Earmarks Half of 5 Bln Yuan Fund Raising for VIE Buyouts (Chinese article)
China Box Office Posts Monthly Record with 5 Bln Yuan in July (Chinese article)
Bottom line: Momo’s plan to privatize just 6 months after its IPO could set a new record, while Focus Media’s latest delay in its China re-listing plan should serve as a warning for others considering similar backdoor listings.
Momo unveils de-listing plan
The privatization story for US-listed Chinese companies has gained yet another member, with word that social networking app operator Momo (Nasdaq: MOMO) has become the latest name to receive a management-led buyout offer. The offer comes just 6 months after Momo made its trading debut in New York, and if it succeeds Momo could win the new record for a Chinese company with the shortest life as a US-listed company.
It’s worth noting that Momo’s announcement is the only one we’ve seen over the last 24 hours, which perhaps marks a slowdown from the 3 companies that made similar announcements over the long Chinese holiday weekend. (previous post) Many of the firms that are trying to de-list are eying re-listings at home in China, where their shares might be more appreciated by local investors. Read Full Post…
Bottom line: More than $20 billion in new fund-raising deals by China companies outside the country reflects the huge amount of global money now chasing Chinese investments, lured by the nation’s soaring stock markets.
Billions flood into Chinese companies
I was so surprised by the number of major new China-related deals churning through the fund-raising system that I decided to do some math, which showed that 5 deals in the headlines today were worth a staggering total of $21 billion. Those deals involved a wide range of topics, led by a new $9 billion privatization bid for software security specialist Qihoo 360 (NYSE: QIHU), the largest such plan to date among a wave of Chinese firms de-listing from New York.
That deal was followed in size by another similar one from Focus Media, whose $7.4 billion plan to re-list in Shanghai following its own New York privatization has hit an unexpected hurdle with an investigation of the shell company that is hosting the backdoor listing. The there’s a hefty $3.5 billion fund-raising plan by leading brokerage Citic Securities (HKEx: 6030; Shanghai:006030), which has attracted 2 of Singapore’s leading investors as it prepares to issue new shares in Hong Kong. Read Full Post…
Bottom line: China’s securities regulator should work with overseas-listed Chinese firms to chart a well-defined path for them to return home to list, to encourage such movement and avoid burdensome bureaucracy.
Chinese “turtles” return home to list
A growing trend that is seeing Chinese firms abandon US listings to return home gained big momentum last week, when 2 more companies announced plans to de-list from New York and a third that privatized 2 years ago moved close to a China re-listing.
In the first category, medical devices maker Mindray Medical (NYSE: MR) announced a management led buy-out offer late in the week, which was followed a day later by a similar offer for solar panel maker JA Solar (Nasdaq: JASO). Meantime, formerly New York-listed outdoor advertising specialist Focus Media took a major step toward becoming the first Chinese company to re-list at home by injecting itself to an existing Shenzhen-traded company. Read Full Post…
Bottom line: Legend Holdings is likely to get a tepid reception for its new shares that could start trading by month’s end, while Focus Media is also likely to complete its backdoor listing in Shenzhen in that time frame.
Focus Media comes home to list
A new IPO, a backdoor listing and a buyout offer are all in the news today in Hong Kong, China and New York, spotlighting an emerging dynamic that is seeing Chinese companies abandon US listings for offerings closer to home. The choice of Hong Kong instead of China for the upcoming IPO by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), also reflects the difficulties that private Chinese companies continue to face when trying to list at home in Shanghai or Shenzhen.
China’s 2 main domestic stock markets have traditionally favored big state-owned companies, a big factor that prompted Legend to look to Hong Kong where it will meet with local stock exchange officials this week in the run-up to its looming IPO. At the same time, outdoor advertising specialist and formerly New York-listed Focus Media has just taken a major step towards a re-listing in China by injecting itself into a Shenzhen-listed firm. Last on our list is children’s website Taomee (NYSE: TAOM), which has just become the latest New York-listed Chinese firm to receive a privatization offer due to undervaluation. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 3. To view a full article or story, click on the link next to the headline.
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Focus Media To Inject Assets To Hongda (Shenzhen: 002211) For Up To 45.7 Bln Yuan (Chinese article)
Sina (Nasdaq: SINA) Announces Agreement with CEO for US$456 Mln Cash Investment (PRNewswire)
Taomee (NYSE: TAOM) Receives “Going Private” Proposal at $3.588 Per ADS (PRNewswire)
Wanda Cinema Line (Shenzhen: 002739) Buys Australian Cinema Chain Hoyts (English article)
Kunlun Tech (Shenzhen: 300418) To Buy Finnish Game Maker Supercell – Source (English article)
Bottom line: Focus Media could complete its backdoor listing in Shenzhen within the next month, kicking off a new wave of similar migrations by formerly US-listed Chinese firms looking for higher valuations from local investors.
Focus Media to list in Shenzhen via Hongda
Faded outdoor advertising specialist Focus Media is inching towards its goal of becoming China’s first formerly New York-traded firm to re-list in its home market, with reports that it has selected a Shenzhen-listed company to make a backdoor IPO. This particular migration has been in the works for more than a year now, and could end soon with this backdoor IPO that would see Focus take over the public listing of Hongda Building Materials (Shenzhen: 002211). Read Full Post…
