Internet Investors Seek Refuge in Big Names 互联网投资者选择性支持中国市场领头羊

By newsdoug on December 6, 2011

Investors proceed with caution on China Internet Financing for Chinese web firms may have slowed as the country’s Internet bubble starts to burst, but a couple of major new deals show it certainly hasn’t stopped, with investors simply becoming more selective about who they support. The latest deals have seen Internet heavyweight Tencent (HKEx: 700) raise a hefty $600 million in its first US dollar bond offering, while leading clothing retailer Vancl has reportedly raised $230 million in new venture funding. Let’s look at the Tencent deal first, whose $600 million was at the lower end of its original plan to raise anywhere from $500 million to $1 billion. (English article) The fact that the figure came in at the low end shows investors are still somewhat wary of Chinese Internet firms, which have been the source of a series of recent accounting scandals on Wall Street. Concern is also no doubt high that China’s overheated Internet sector could be nearing a correction. Lastly, some investors might also be concerned about potential overseas acquisitions that Tencent might be eying for this new money. The company has previously courted dubious overseas acquisitions including News Corps’ (Nasdaq: NWSA) faded MySpace social networking service, even though it ultimately lost out in that bidding war. But that doesn’t mean that Tencent won’t bid for more troubled overseas Internet assets. Meantime, Vancl’s securing of this latest funding probably comes as a welcome relief for a company that has had to repeatedly delay a planned US initial public offering due to very weak sentiment towards China Internet stocks amid the recent string of reporting scandals. (English article) Several companies have gone ahead with IPOs despite the current negative climate, mostly with poor results. Vancl clearly isn’t as badly in need of cash as these other companies, and its receipt of these new funds should help it to buy more time until the IPO climate hopefully improves next year. All this shows that investors are still willing to support premium Chinese Internet names, though don’t look for many start-ups to receive major funding or make public offerings in the next 6 months.

Bottom line: New major fund raising by Tencent and Vancl show investors are willing to fund premier Internet names, though younger firms are likely to see far less investor interest in the next 6 months.

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