Bottom line: Chinese Internet blue chips like Baidu and Ctrip should continue to flourish on Wall Street due to their leading status, while shares of smaller names will sputter and even plunge if a recent wave of buyout offers starts to collapse.
Baidu in $1.25 bln bond offer
The last 2 days have been most notable for what hasn’t happened over that time, namely the announcement of any new buyout offers for US-listed Chinese companies. Barring any new announcements on this final day of the trading week, the second quarter of 2015 is likely to end with a record 20 such privatization bids for Chinese firms looking to de-list from New York in search of better valuations back in China.
At the same time, 2 of China’s premier US-listed Internet companies are on the cusp of issuing a combined total of nearly $2.5 billion in new bonds, reflecting a new reality for Chinese companies on Wall Street. That reality is allowing China’s leading Internet names like search giant Baidu (Nasdaq: BIDU) and top online travel agent Ctrip (Nasdaq: CTRP) to still do quite well in New York, even as the far bigger number of lesser-known companies see their shares sputter. Read Full Post…
Bottom line: Alibaba’s new fund-raising activities are relatively small but provide insight about its future direction, hinting at a major pushes into the gadget and financial services spaces.
Alibaba, Foxconn invest in Pepper
A couple of new fund-raising headlines involving e-commerce giant Alibaba (NYSE: BABA) show company founder Jack Ma engaged at one of the things he does best, namely making deals and forging new partnerships. Neither deal is particularly big in terms of dollar investment, but both provide some insight on the kinds of partners and tie-ups that Ma is pursuing for both the New York-listed Alibaba and its separate but affiliated Ant Financial unit. Read Full Post…
Bottom line: The next 2 weeks could see another 3-5 US-listed Chinese companies announce buy-out bids, but the number will slow after that and many deals could collapse if China’s stock market rally falters.
3 more names join buy-out queue
Another 3 companies have joined the fast-growing privatization queue over China’s long holiday weekend, leading me to create the temporary tag of “buyouts” for headlines describing this brief but explosive story. For anyone who hasn’t followed that story closely, the current quarter has now seen 19 privatizations unveiled by US-listed Chinese firms, including the 3 latest announcements from video surveillance specialist Vimicro (Nasdaq: VMIC), advertising specialist AirMedia (Nasdaq: AMCN) and IT services provider China Information Technology (Nasdaq: CNIT).
In related news, leading web portal Sina (Nasdaq: SINA) has announced it is joining a group making a previously announced privatization bid for E-House (NYSE: EJ), one of China’s leading real estate services companies. That particular move looks related to an existing alliance between the 2 companies, and thus probably just marks a continuation of that relationship that I’ll describe below.
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: 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: A record IPO by Guotai Junan and massive private fund raising by a relatively unknown website reflect the overheated state of China’s capital markets, and could reflect a cresting of the current stock market rallies.
Guotai Junan eyes mega-IPO
With China’s stock market posting 2 consecutive days of large losses, everyone is starting to guess whether the current stock market rally may have finally crested and a period of correction begun. Two of the latest fund-raising headlines show just how frothy and ambitious activity has become, led by a plan for China’s biggest IPO in 5 years from securities brokerage Guotai Junan. The other headline comes in the venture funding space, where Zhubajie, a relatively unknown company in the hot crowdsourcing sector, has just landed an impressive 2.6 billion yuan ($420 million) in new funding. Read Full Post…
Bottom line: The see-saw performance of iDreamSky shares after its buyout offer reflects a growing number of speculators in the market for US-listed China shares, while Legend’s Hong Kong IPO is likely to price and debut weakly.
iDreamSky gets buyout offer
As we head into the end of June, the first half of 2015 is set to set an unusual record of becoming the first such period to see a negative number of New York IPOs by Chinese companies. That fact is being driven by a record number of companies that have announced privatization plans, including the latest by mobile game developer iDreamSky (Nasdaq: DSKY). If this latest plan is successful, iDreamSky would also set a new record for shortest time ever as a New York-listed Chinese firm, since the company only made its IPO last August.
Meantime, one actual IPO that is moving forward is coming in Hong Kong, where Legend Holdings, parent of PC giant Lenovo (HKEx: 992), has set a price range, date and chosen a ticker for its offering. This particular deal appears to be getting a ho-hum reception in Hong Kong, as most investors remain fixated on a rally across the Chinese border that has seen China’s domestic stock markets more than double over the last year. Read Full Post…
Bottom line: A new strategic investment in LightInTheBox by a major shoemaker is a vote of confidence in its turnaround story, while Bona Film’s buyout offer caps a week of record privatization activity for US-listed Chinese firms.
LightInTheBox gets new strategic partner
Last week’s privatization frenzy for US-listed Chinese firms saw one more company join the queue on the final day of the week, with movie maker Bona Film (Nasdaq: BONA) adding its name to the list of companies looking to end their relationship with fickle New York investors. That final offer brought the number of US-listed Chinese firms receiving buyout offers last week to 5, which must surely be a record for such bids in a single week.
Meantime, another interesting deal has seen underperforming e-commerce company LightInTheBox (NYSE: LITB) receive its own big new investment from one of China’s leading shoemakers. That deal saw Aokang Shoes (Shanghai: 603001) buy about a quarter of LightInTheBox’s shares, hinting at a major new direction for the foreign-focused e-commerce company and also implying it’s unlikely to de-list from New York anytime soon. Read Full Post…
Bottom line: A new management-led privatization bid for Homeinns and many other similar recent plans could stand a 50-50 chance of failing if they don’t complete the process before China’s stock market rally ends.
Homeinns joins privatization queue
Leading budget hotel chain Homeinns (Nasdaq: HMIN) has become the latest US-listed Chinese company to receive a buyout offer, capping a record week that has seen at least 4 such bids. In the past, 4 privatizations in a 6-month period would be considered big, even though such bids have been coming at a slow trickle over the last 3 years for Chinese companies whose shares have languished on Wall Street. But that tickle has turned into a flood these last 2 months, fueled mostly by greed, as company owners look enviously at China’s rallying stock markets that have more than doubled over the last year. Read Full Post…
Bottom line: An ongoing wave of buyout offers for US-listed Chinese firms is being funded by speculative money that will quickly evaporate when China’s stock market rally fizzles, causing some deals to collapse when that happens.
Gamblers fund privatization wave
It’s a new day, which means it’s time to take a look at the latest US-listed Chinese companies receiving privatization offers from opportunistic investors looking for bargains. Today it’s data center operator 21Vianet (Nasdaq: VNET) and beleaguered social networking site (SNS) operator Renren (NYSE: RENN) that are headed for the exit door.
I’ve been writing about this recent flurry of privatizations for the last few months, which is quickly turning into a flood as investors scramble to assemble deals to buy companies whose shares have languished on Wall Street. The idea is that these companies would be far more appreciated, and therefore get much higher valuations, from investors in their home China market, where an ongoing stock market rally has seen the main Shanghai index more than double over the last year. Read Full Post…
Bottom line: The ongoing privatization wave of Chinese firms abandoning New York listings is likely at or near a peak, with gaming and solar companies as some of the likeliest candidates to make new announcements.
E-House heads for exit door
The exodus from New York by neglected Chinese companies marches on this week, with online real estate company E-House (NYSE: EJ) becoming the latest to receive a management-led buyout offer. At the same time, online dating site Jiayuan (Nasdaq: DATE) has announced that a suitor who made a similar offer for the company in March has sharply raised its bid, following complaints that the original offer grossly undervalued the company.
When the history books are written, the second quarter of 2015 could well go down as the height of a wave of privatization bids for New York-listed Chinese firms, whose shares have languished in the last few years due to lack of interest from US investors. At the same time, many of those companies are casting an envious eye on China’s rallying stock markets, and are almost certainly hoping to re-list at home in the future. Read Full Post…
