Bottom line: Canadian Solar’s Recurrent Energy unit is likely to make its first public filing for a New York IPO in the next 2 weeks and should get a positive reception, while Jumei is likely to quietly de-list from the US in the next 3-4 months.
Recurrent Energy gets big new financing
One of the few Chinese IPOs likely to happen in New York this year is moving closer to the launch gate, with word of major new financing for the power plant-building unit of solar panel maker Canadian Solar (Nasdaq: CSIQ). But while that IPO for Recurrent Energy moves closer to the IPO gate, announcement of a new privatization bid for online cosmetics seller Jumei International (NYSE: JMEI) is far more typical for the market these days.
This pair of stories reflect a growing new reality for US-listed Chinese companies. That reality is seeing some of China’s leading private companies choose New York for their listings, banking on interest from global investors seeking to buy into the China growth story. At the same time, many smaller lesser-known Chinese companies listed in New York have discovered US investors are far less interested in their stories, and are privatizing with plans to re-list and hopefully get higher valuations back in China. Read Full Post…
Bottom line: Washington should seriously consider a ground-breaking plan that would sell the Chicago Stock Exchange to a Chinese buyer, potentially including conditional approval to allay national security concerns.
Chinese buyer bids for Chicago Stock Exchange
China’s outbound M&A passed a new milestone last week when a Chinese investor group announced plans to buy the Chicago Stock Exchange, with an aim to repositioning it as a US listing ground for Chinese companies. The move would mark the first purchase of a US stock exchange by a Chinese buyer, even though the Chicago Stock Exchange is a tiny player compared to the 2 main US boards in New York.
But recent concerns that have threatened several other similar cross-border purchases could come into play, as Washington may worry about opening the nation’s vital capital markets to Chinese ownership. Beijing could also express concerns, since the buyer is a real estate company with little or no experience with financial markets. Read Full Post…
Bottom line: Baidu’s sale of its Qiyi video unit is a first step before a domestic IPO, and the valuation from that sale shows that Alibaba is overpaying for rival video site Youku Tudou and that industry leader LeTV is still highly overvalued.
Baidu sells Qiyi video unit in run-up to IPO
Two of China’s largest online video sites are in the headlines as the nation returns to work after the week-long Lunar New Year holiday, led by word that Baidu (Nasdaq: BIDU) is selling its controlling stake of its iQiyi online video unit. In this case the move looks like preparation for a domestic IPO by the unit, since the buyer of the stake is a group led by Baidu founder Robin Li and iQiyi chief Gong Yu.
The second report has Youku Tudou (NYSE: YOKU) announcing a date for its shareholders to vote on an offer to sell the company to e-commerce leader Alibaba (NYSE: BABA). The meeting will take place on March 14, and will mark a final step before Youku Tudou ceases its brief but stormy life as a publicly traded company and becomes part of Alibaba. Read Full Post…
Bottom line: eLong and Ming Yang will complete their privatizations and de-list by the middle of the year, but more than half of the buyout offers for Chinese companies still waiting to exit New York will ultimately collapse.
eLong signs final buyout offer
Two longtime New York-listed Chinese companies are charging for the exit door on this last trading day in the Year of the Ram, with online travel site eLong (Nasdaq: LONG) and wind power equipment maker Ming Yang (NYSE: MY) both saying they’ve just signed final buyout agreements that will result in their privatization. Neither of these deals was ever in much doubt, since eLong’s was backed by Internet titan Tencent (HKEx: 700) and Ming Yang’s was relatively small, valued at less than $400 million, and was crafted by the company’s chief and dominant shareholder.
This pair are likely to ultimately complete their privatizations over the next 2-3 months and de-list by mid-year, following previous successful de-listings of names like online game operators Perfect World and China Mobile Games. But the big majority of previously announced buyout plans by around 40 US-listed Chinese companies are still pending, and I still believe that half or more of those could ultimately collapse due to failure to secure necessary funding. Read Full Post…
Bottom line: Yingli’s new bank loan will be followed by a major restructuring that will force big losses on bond and shareholders, while a new asset-backed bond program to help the broader panel sector raise money will meet with tepid reception.
Beijing throws new lifelines to Yingli, solar sector
China is throwing a couple of lifelines to its struggling solar panel sector, including a relatively large rescue package for Yingli (NYSE: YGE), the player in the most precarious position. That package will see a consortium of banks, led by the policy-driven China Development Bank, provide Yingli with 2 billion yuan ($300 million) in funds as the company tries to reorganize its financially strapped balance sheet.
Word of the rescue package comes as media are reporting separately that China is preparing a much bigger lifeline for the sector, by allowing solar panel makers to sell bonds backed by the growing number of solar farms they are self-developing. Such farms provide a steady source of income from the power they generate, and thus should theoretically be more attractive to investors than directly investing in the financially-challenged solar panel makers themselves. Read Full Post…
Bottom line: Wall Street Round-Up’s new venture funding from China Media Capital testifies to its rapid rise, using a similar formula to the popular US-based Business Insider financial news aggregator.
SMG backs Wall Street Round-Up
A fast-rising financial news website that looks like China’s answer to the popular US site Business Insider has just netted its latest funding, in the amount of a relatively modest 100 million yuan ($15 million). But what’s attracting the biggest interest in this story is the source of the funding, which is coming from China Media Capital (CMC), the new media investment arm of the aggressive Shanghai Media Group (SMG).
As a member of the media, this story is of particular interest to me because of the controversial nature of the funding recipient, called Huawerjie Jianwen, or roughly Wall Street Round-Up. The company was founded as a financial news blog in New York in 2010 by a group of young entrepreneurs, but its rapid rise didn’t begin until they returned to China in 2013 and re-registered the company here in Shanghai. Read Full Post…
Bottom line: Pactera is likely to get sold and re-listed in China later this year, while New Oriental is likely to make a domestic listing worth up to $100 million for its Xun Cheng online education in a similar time frame.
Blackstone shops around Pactera
The homeward migration of overseas-listed Chinese firms is moving ahead, with word that privatized IT outsourcing firm Pactera and the online unit of education giant New Oriental (NYSE: EDU) are both potentially eyeing domestic IPOs in the upcoming Year of the Monkey. These stories represent 2 different threads from the larger story of overseas-listed Chinese companies returning home to make new IPOs.
The thread represented by Pactera has seen around 40 US-listed Chinese companies receive privatization offers over the last year from buyout groups hoping to re-list the firms in China at higher valuations. The New Oriental bid represents a second, more recent trend that has seen US-listed category leaders indicate they will keep their primary listings in New York, but then spin off some of their smaller units for separate domestic listings in China. Read Full Post…
Bottom line: Sinovac may be forced to raise its buyout offer following a chorus of complaints from investors, while Ku6’s new buyout offer is unlikely to meet with any resistance due to its small size and big premium.
Sinovac gets buyout offer
The final days of the Year of the Ram are seeing 2 more US-listed Chinese companies head for the exit door, with new privatization announcements from vaccine maker Sinovac (Nasdaq: SVA) and Internet video company Ku6 (Nasdaq: KUTV). Sinovac’s announcement instantly drew criticism from one US fund manager for being too low, and it’s quite possible we could see some law firms that specialize in securities litigation voice similar criticism.
Meantime, no one is criticizing the Ku6 offer, mostly because this is a company that ceased to be relevant long ago. I’ve followed Ku6 since it first went public as Hurray Holdings in 2005. Back then it raised $70 million in its IPO, and it was acquired 4 years later by online gaming giant Shanda. But all that seems like a distant memory now, and the new privatization bid values the company at just $51.5 million. Read Full Post…
Bottom line: M&A and IPOs by Chinese gaming companies will remain low for the next 2-3 years due to lack of investor interest, but could pick up after that if some players start losing money and have to close or sell themselves to rivals.
Investors shun gaming companies
A new report on global gaming deals in 2015 is shining a spotlight on 2 major trends in China, namely the sector’s high degree of fragmentation and also the near-freeze in IPOs by Chinese companies last year. In fact, 3 Chinese gaming companies actually privatized from New York stock exchanges last year, accounting for more than half of the sector’s global deals last year in terms of total value.
Among the big Chinese deals, the largest saw stalwart Shanda Games finally privatize in a buyout valued at nearly $2 billion, ending a 2-year process. Another big gaming firm to privatize last year was veteran Perfect World, whose buyout was valued at $1 billion. The third was China Mobile Games, whose buyout was worth about $700 million. Read Full Post…
Bottom line: Baidu’s reported plan to spin off many of its non-core units for separate listings in China looks like a smart move to attract Chinese buyers for its newer businesses while retaining US investors for its lucrative core search business.
Baidu eyes domestic IPOs for non-core units
Leading search engine Baidu(Nasdaq: BIDU) is reportedly eyeing plans to spin off many of its smaller units for IPOs in China, marking a novel alternative for the growing number of Chinese tech firms torn between listing at home and in the US. The US was the traditional choice for listings by Chinese venture-backed tech firms for most of the last 2 decades, since domestic listings were difficult or impossible during that time due to a heavy bias towards big state-owned companies.
But more recently China has rolled out a new group of boards aimed at attracting high-growth venture-backed companies. The earliest of those, the ChiNext board launched in 2009, has proven quite successful, nurturing such high-flyers as online video site LeTV (Shenzhen: 300104) and film production company Huayi Bros (Shenzhen: 300027). A more recently launched over-the-counter (OTC) board has also proven quite popular, and Shanghai plans to launch its own emerging industries board later this year. Read Full Post…
Bottom line: Coolpad’s shares are likely to come under pressure for the rest of 2016 due to stiff competition in China’s smartphone market, and it could be forced to raise more money last this year following its newly-announced rights issue plan.
Coolpad taps stakeholders for more funds
It seems like $700 million and 2 major new alliances weren’t enough to prop up financially challenged smartphone maker Coolpad (HKEx: 2369), which has just announced a new share rights offer to raise up to HK$736 million ($95 million). The deal marks the latest distress signal coming from China’s overheated smartphone sector, which has seen Coolpad and a vibrant field of other domestic brands engage in a fierce game of price wars over the last 2 years.
What’s somewhat revealing about this new capital raising plan is its relatively paltry size, and also the large discount that Coolpad had to offer to sell the new shares. Even worse, one of the main buyers of the new shares is Chinese online video giant LeTV (Shenzhen: 300104), which should have been willing to pay closer to market levels for the new shares after becoming one of Coolpad’s largest stakeholders last year. Read Full Post…
