Bottom line: Lufax’s Hong Kong IPO could launch by the end of this year and will get a strong reception, while Xinhuanet’s Shanghai IPO will get a similarly positive reception due to strong support from state-run investors.
Xinhuanet approved for Shanghai IPO
Just days after the stodgy Postal Savings Bank of China launched an IPO that will be the world’s biggest in 2 years, the much higher-tech P2P lender Lufax has kicked off another Hong Kong listing that’s nearly as large. More specifically, Shanghai-based Lufax has begun hiring investment banks for a listing that could raise up to $5 billion, according to new reports.
Meantime, a flurry of new domestic Chinese IPO plans is also in the headlines, led by word that state-owned online news giant Xinhuanet has been approved for a new listing in Shanghai. China stock watchers might recall that Xinhuanet’s IPO plan first surfaced in the headlines 3 years ago, but was indefinitely shelved due to repeated slowdowns and freezes for new domestic offerings due to market volatility. Read Full Post…
Bottom line: Alibaba will come close to meeting the top end of its target of raising $3-$4 billion with a new bank loan, and chances are as much as 50-50 that it will use the funds to make bids for Groupon or the stake of itself held by Yahoo.
Alibaba turns to banks for new mega-loan
After first splashing into the headlines with rumors 2 weeks ago, e-commerce giant Alibaba (NYSE: BABA) has finally announced its latest cash-raising exercise in the form of a syndicated loan worth at least $3 billion. Following that official confirmation, all eyes will now be looking to see if Alibaba can find more demand to boost the loan amount even higher, and for any indication of what exactly it has planned for the new funds.
Let’s begin by looking at the latest reports, which have Alibaba announcing the loan in a regulatory filing. It’s somewhat noteworthy that the high-profile Alibaba hasn’t issued a formal press release about the loan, perhaps because it’s waiting to see where the final amount will top out. But perhaps Alibaba has also finally realized it’s better not to raise expectations too high with a hype-filled announcement, which can ultimately backfire if interest from smaller banks in joining the new lending syndicate is poor. Read Full Post…
Bottom line: Alibaba and Baidu’s inclusion in MSCI indexes and SouFun’s new dual listing in China highlight reasons why overseas markets are still an attractive place for leading private Chinese companies to list.
SouFun eyes dual listings in China, NY
Two new developments last week highlighted why overseas listings are still beneficial and even desirable for some Chinese companies, even as a flood of New York-listed firms move ahead with plans to leave New York and re-list in China.
The first development saw MSCI, one of the world’s top index compilers, say it would include Chinese companies in its products for the first time by choosing several US-listed firms, including Internet titans Alibaba(NYSE: BABA) and Baidu (Nasdaq: BIDU). The second saw investors applaud a plan by leading online real estate services firm SouFun (NYSE: SFUN) to take control of a Shanghai-listed company, a move designed to gain access to Chinese capital markets while maintaining its New York listing. Read Full Post…
Bottom line: CICC and Jiuxian are benefiting from a growing number of domestic listing options for private Chinese companies, but both will still need to show they can be profitable industry leaders for investors to take them seriously.
Jiuxian finally debuts on China OTC
A couple of new IPOs are highlighting the growing allure of China’s increasingly diverse stock markets for domestic companies that used to flock to New York. Leading the headlines is a very respectable performance in the long-awaited Hong Kong trading debut for CICC (HKEx: 3908), China’s oldest investment bank. The strong debut came even after CICC had to scale back the offering due to weak demand, and market watchers are attributing the performance to separate news that China will resume domestic IPOs by year-end after a pause of several months.
In the other headline, online wine seller Jiuxian has become the latest Chinese Internet firm to list on the country’s 2-year-old over the counter (OTC) market. The loss-making Jiuxian had initially aimed to list in New York, but abandoned that plan for a simpler offering at home. It joined other money-losing startups making similar listings over the last week, including online classified ad site Baixing and Alibaba-backed (NYSE: BABA) soccer club Evergrande Taobao. (previous post) Read Full Post…
Bottom line: A plan by Alibaba’s chairman and vice chairman to borrow $2 billion using their company stock as collateral is a simple diversification move, and doesn’t represent any change in the company’s fundamentals or outlook.
Alibaba chairman, vice chairman eye $2 bln loan
Shares of e-commerce leader Alibaba (NYSE: BABA) have been buzzing these last few days since media reported that Chairman Jack Ma and one of the company’s other co-founders are preparing to diversify their company holdings that are worth billions of dollars. Neither Ma nor Vice Chairman Joe Tsai is planning an actual share sale, which would almost certainly undermine the company’s shaky stock. Instead, the pair are in talks to take out a $2 billion loan using their huge stash of Alibaba shares as collateral.
Alibaba’s shareholders didn’t seem to like the plan too much, and made their voices heard by trimming nearly 4 percent from the company’s share price after reports of the move surfaced late last week. The latest close means Alibaba stock now trades at a record low of $63.91, or about 6 percent below the $68 price for its record-breaking $25 billion IPO that will celebrate its one-year anniversary later this month. Read Full Post…
Bottom line: New fund raising by Ctrip and Tujia looks like far more than either company needs, and is part of a broader wave seeing Chinese Internet sites raise big funds to take advantage of strong investor sentiment.
Tujia raises $250 mln
Someone recently asked me why so many companies in China are currently rushing to raise cash, and, after some quick thought, I provided my best answer: Because they can. That seems to be the mentality among Chinese companies these days, including leading online travel agent Ctrip (Nasdaq: CTRP), which has just issued bonds to raise a cool $1.1 billion in new cash that it really doesn’t need. But that statement isn’t completely true, as Ctrip is in another headline that has it joining in a new $250 million funding round for Tujia, China’s equivalent of Airbnb. Read Full Post…
Bottom line: Baozun’s IPO is likely to price in the middle of its range and debut flat despite its strong credentials, as waning sentiment towards Chinese Internet companies may prompt other recently listed names like Jumei to launch privatization bids.
Baozun IPO gets lukewarm response
Sentiment towards China-listed US firms continues to show signs of weakening, with word that e-commerce website designer Baozun has had to scale back its IPO in New York as its shares move closer to their trading debut. Meantime, shares have jumped over the last week for e-commerce firm Jumei International (NYSE: JMEI), amid talk that it may be considering a privatization bid to re-list back back in China.
Both stories reflect a recent trend that has seen a growing number of second-tier Chinese Internet companies abandon New York listings due to lack of investor interest. Many are believed to be eying re-listings in China, where their names are better known and companies of all types have achieved lofty valuations these days during a stock market surge that has seen shares double since a rally dating back to last summer. Read Full Post…
Bottom line: Baozun’s IPO should achieve its $200 million fund-raising target and the stock could perform relatively well for the rest of the year if it can show that it will become profitable for all 2015.
Baozun files for $200 mln IPO
The first serious Internet IPO of the year could finally be in the pipeline, with word that e-commerce services provider Baozun has filed for a New York listing that would be a first-of-its-kind for this type of company. Media are calling Baozun an e-commerce firm, but the reality is that the company helps others design and operate e-commerce sites, meaning it doesn’t have to compete itself in the fiercely competitive space.
The company’s largest shareholder is actually e-commerce leader Alibaba (NYSE: BABA), which holds 23 percent of Baozun. That relationship underscores Baozun’s unique market position as a service provider rather than actual website operator, and the company cited third-party data saying it currently controls about 20 percent of its market. The Alibaba relationship also provides important ties with many major retailers that already do business on Alibaba’s hugely popular Tmall. Read Full Post…
Bottom line: CICC’s IPO later this year will attract lukewarm investor interest due to its fading prospects, forcing it to scale back its plan to raise up to $1 billion.
CICC to get lukewarm reception in HK
A new story on homegrown investment bank CICC is casting a spotlight on the kind of interesting but also somewhat uninspiring Chinese companies that are likely to make offshore IPOs this year, after last year’s bumper crop of offerings that included a far more exciting field of candidates. Yesterday I wrote about Legend Holdings, parent of PC giant Lenovo (HKEx: 992), which wants to raise $2-$3 billion through a listing in Hong Kong. Like Legend, China International Capital Corp (CICC) is a company that’s unlikely to excite investors but could still draw a some interest as a decidedly second-tier player. Read Full Post…
Bottom line: Mobile SNS firm Momo is likely to raise far less than the $300 million it has targeted for its IPO, as it kicks of a mini-surge of loss-making Chinese tech firms racing to list in New York by year end.
Momo kicks off year-end IPO rush
A record year of fund raising for Chinese firms on Wall Street could still have some life left, with word of another major offering plan by Momo, operator of mobile-based social networking (SNS) service. The company’s plan to raise up to $300 million would have looked ambitious at this time last year, when New York IPOs by Chinese firms were just starting to gain momentum after a nearly 3 year deep freeze. But that kind of target has become the norm in the current climate, and I expect we could see a flurry of similar-sized offerings over the next 5 or 6 weeks before the final curtain comes down on a banner year for Chinese tech IPOs in 2014. Read Full Post…
What previously looked like an exciting Hong Kong IPO by CICC, China’s earliest homegrown investment bank, is rapidly losing its luster, with word that the company’s Chairman Jin Liqun is leaving the company. His departure, which was first rumored earlier this month, comes just a week after Levin Zhu, CEO of the company formally known as China International Capital Corp, also resigned to reportedly pursue a start-up in the hot area of Internet finance. Read Full Post…
