Bottom line: NetEase is likely to complete a spin-off of its news division, possibly through a sale to Sina, while Postal Savings Bank’s massive IPO will meet with tepid reception due to limited growth prospects.
NetEase plans portal spin-off
Two significant but very different IPOs are in the headlines as we get set for the Mid-Autumn holiday break, one from China’s vibrant private sector and the other from a big state-run behemoth. In the former category is NetEase (Nasdaq: NTES), one of China’s oldest Internet companies, which is reportedly mulling an IPO for its news portal, one of its original businesses with a history dating back to the 1990s. In the other news, China Postal Savings Bank has reportedly placed most of the shares for its massive $8 billion listing with a group of 6 cornerstone investors. Read Full Post…
Bottom line: Yum’s selection of Primavera and Ant Financial to anchor its China unit spin-off look like reasonable choices, as it tries to put the business back on solid footing before a New York IPO that should enjoy modest success.
Yum China sells stake to Primavera, Ant
After months of talks and speculation, fast food giant Yum Brands (NYSE: YUM) has announced that two firms with distinctly financial backgrounds will anchor its plan to spin off its China business. The larger of the investors, private equity firm Primavera, doesn’t look extremely exciting strategically, as it’s mostly a private equity investor with little experience in the tough retail sector. The second investor, Alibaba’s (NYSE: BABA) Ant Financial affiliate, looks a little more interesting since its core Alipay electronic payments service could help to propel Yum’s aging KFC and Pizza Hut brands into the modern era. Read Full Post…
Bottom line: UnionPay’s announcement that its cards are usable at nearly all US ATMs shows it is targeting local US customers, while stiff competition will limit the success of new Xiaomi and Huawei e-payment services.
UnionPay makes big gains in US
It’s been a busy week for Chinese companies in the electronic payments headlines, with 3 major names making big moves in the space. Leading the pack is industry stalwart UnionPay, China’s equivalent of MasterCard (NYSE: MA) and Visa (NYSE: V), which is saying its own credit cards are now accepted by an impressive 80 percent of US merchants. The other headlines are coming from smartphone makers Huawei and Xiaomi, which have announced roll-outs for China-based electronic payment services that will compete with other similar products from Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). Read Full Post…
Bottom line: Baidu’s bitcoin advertising ban represents a more proactive stance that major Chinese firms are starting to take towards controversial business, as they seek to boost their images and avoid scandals.
Baidu bans bitcoin ads
Online search giant Baidu(Nasdaq: BIDU) rippled through the headlines last week with the relatively small news that it would no longer take advertising business from services that hosted trading in bitcoin and other virtual currencies. While seemingly minor on the surface, the move had larger significance due to the controversial nature of virtual currencies and Baidu’s decision to take action without government prodding or the threat of a scandal. Read Full Post…
Bottom line: The collapse of a cross-investment between China’s Citic Bank and Taiwan’s CTBC Financial reflects growing cross-strait tensions, and could signal a chill in major new cross-strait investments over the next 4 years.
Citic Bank scraps Taiwan investment
In a troubling sign for companies doing business across the Taiwan Strait, an equity swap between China’s Citic Bank (Shanghai: 601988) and Taiwanese peer CTBC Financial (HKEx: 2891) has collapsed due to regulatory issues. In this case it appears that Taiwan scuttled the deal for reasons I’ll explain shortly, though a Citic spokesman emphasized no politics were involved. But regardless of the stated reasons, this particular development seems to reflect growing tensions between Taiwan and China under a new Taiwanese administration that’s far more wary of Beijing than its predecessor. Read Full Post…
Bottom line: Weakening sentiment towards Postal Bank’s IPO reflects concerns about China’s economic slowdown, while Lufax’s choice of Hong Kong for its IPO should help to attract more international investors.
Lufax IPO bound for HK
What’s likely to be this year’s biggest IPO by Postal Savings Bank of China is limping ahead, with word the ultra-conservative lender is set to sign up $6 billion in commitments for its Hong Kong offering. But western investors are reportedly staying away from the deal, worried over high valuations and China’s sputtering economy.
Meantime, another financial IPO by leading P2P lender Lufax is back in the headlines, with word the listing probably won’t happen until next year and will occur in Hong Kong. That news marks a flip-flop from reports earlier this week, when media cited Lufax’s largest backer saying plans were still on track for an IPO this year, with Shanghai as the preferred listing location.Read Full Post…
Bottom line: Lufax’s reiteration of plans for an IPO by year-end indicate China’s regulator may increase new listing approvals as the market stabilizes, while progress in Yunda’s backdoor listing also may reflect a relaxing attitude by the regulator.
Lufax sticks to plan for IPO by year-end
After an anemic flow of domestic IPOs so far this year, building pressure and a stabilizing stock market may finally be prompting the regulator to step up the pace as we head into fall. That appears to be the thinking at Lufax, China’s leading P2P lender, which says it is still targeting an IPO by the end of this year, after previously indicating China would be its first choice for such a listing. Meantime, an easing of the IPO climate won’t come soon enough for parcel delivery firm Yunda, which has joined many of its peers in moving ahead with a backdoor listing plan in Shenzhen. Read Full Post…
Bottom line: New global initiatives by Alibaba’s cloud and electronic payments affiliates look smart by targeting Chinese customers abroad, but may only stand a 50-50 chance of longer-term success due to fierce global competition.
AliCloud global expansion moves ahead
Following lackluster results for initiatives involving its core e-commerce business outside China, Alibaba (NYSE: BABA) is pushing ahead on the global stage with new moves for 2 of its other areas with big growth potential. One of those has the company unveiling a global strategy for its cloud services unit, AliCloud, which includes a tie-up with former Taiwan smartphone superstar HTC (Taipei: 2498). The other involves Alibaba’s Ant Financial affiliate, which is rolling out its core Alipay electronic payments service in Europe. Read Full Post…
Bottom line: Fosun’s newest acquisitions indicate it could soon become more active in the asset management and drug sectors outside China, with a focus on emerging markets like the BRICS countries.
Fosun buys India’s Gland Pharma
Private equity giant Fosun (HKEx: 656) is in 2 separate M&A headlines in the BRICS nations of Brazil and India, purchasing an asset manager in the former and a drug maker in the latter. Pharmaceuticals and real estate have been 2 of Fosun’s focus areas in its shopping spree both at home and abroad, though the move into developing markets is relatively new.
Fosun has more traditionally focused its global buying on western markets in the US and Europe. So this latest pair of deals could signal a new focus on emerging markets, especially ones like Brazil and Russia where recent economic malaise could be pressuring some debt-laden companies to sell off assets at bargain prices to raise cash. Read Full Post…
Bottom line: Alibaba’s bid for Polish C2C site Allegro looks like a smart move into a related developing market, but could be thwarted by rival Tencent, while affiliate Ant Financial’s new Taiwan insurance tie-up also looks smart though relatively small.
Alibaba bids for Poland’s Allegro
E-commerce giant Alibaba (NYSE: BABA) and its Ant Financial affiliate are in a couple of major headlines as the weekend approaches, each focusing on a strategic growth area. In the first case, Alibaba has entered the bidding for a leading Eastern Europe online auctions site, competing with global rival eBay (Nasdaq: EBAY) for Poland’s Allegro. The second deal has Ant, owner of leading electronic payments service Alipay, expanding its financial services holdings with the purchase of a majority stake in the insurance unit of Taiwan’s Cathay Financial (Taipei: 2882). Read Full Post…
Bottom line: IPOs by China Lending, China Film and Babytree should all do relatively well, and their diverse listing destinations reflect the growing choices available to Chinese companies for public offerings.
Babytree raises 3 bln yuan
A trio of mid-sized entrepreneurial companies are in the IPO headlines, including one headed for New York, another opting for Shanghai and a third eyeing a possible listing on Hong Kong’s underutilized board for high-growth companies. The first of the trio, which will make its trading debut this week in New York, comes from micro lender China Lending Corp (Nasdaq: CLDC). The second comes from China Film Co, the nation’s largest movie distributor; and the third comes from baby products seller and online community operator Babytree, which has just raised a nifty 3 billion yuan in pre-IPO funding. Read Full Post…
