Bottom line: New signals from Qihoo and Wuxi AppTech show they may be getting preferential treatment for A-share listings, as the regulator shifts its policies to favor high-quality private firms for IPOs.
Wuxi AppTech eyes A-share listing
New signals coming from China’s stock regulator hint that it’s softening its stance towards letting companies formerly listed in the US jump the queue for re-listings at home. That appears to be the message, following a string of new reports saying first software security specialist Qihoo 360and now drugmaker Wuxi AppTech are moving towards re-listings on the China A-share market, both within a relatively short period after leaving New York.
This latest development comes not long after SF Express (Shenzhen: 002352), China’s largest parcel delivery company, completed a backdoor listing in Shenzhen, which again shows the regulator might be easing its view on this kind of path to market. The broader theme here, and one that will be important for other private firms waiting to list in China, is that the securities regulator is finally realizing that it’s not always necessary to use a “first come first served” approach when choosing who gets to make IPOs. Read Full Post…
Bottom line: Tencent’s online literature unit is likely to make a Hong Kong IPO later this year, and should get a relatively strong reception due to strong backing and its market leading position for a product with stable long-term demand.
Tencent literature unit eyes HK IPO
If you don’t succeed the first, second and third times, then try again. That could well be the mantra for the digital literature unit of former online entertainment giant Shanda, which has gone through quite a few attempts at an IPO, only to stumble each time. This particular story has quite a few twists, which I’ll review shortly. But the end result appears to be that the unit, previously called Cloudary, may finally succeed in its latest attempt to go to market, this time under its current parentage as the online literature unit of Internet giant Tencent (HKEx: 700). Read Full Post…
Bottom line: Qudian’s IPO will get a moderately warm reception in New York, drawing interest due to its status as a major private fintech firm but also wariness owing to many uncertainties in the young sector.
Qudian moves closer to IPO
Anything involving movement of money has always been slightly problematic in China. Be it paying for things online, paying to play computer games, or even borrowing small sums to buy something like a smartphone, nothing has ever been easy for Chinese consumers. That’s mostly due to the creaky financial system they inherited when the country began its march into the modern era starting in the 1980s and ’90s.
That lack of services has been a godsend for a new generation of companies that are now making their way to market by supplying some of the many basic financial services that consumers crave. An IPO by one of the largest of those looks set to happen in the next 3 months, with word that microlender Qudian has made its first private filings for a New York listing to raise up to $1 billion. Read Full Post…
Bottom line: Yidao’s announcement of plans for an IPO hint at a looming sale of the company by controlling stakeholder LeEco, which could be mulling sales of other recently purchased assets in a bid to ease its cash-crunch.
Yidao prepares for IPO
What do you do when you’re running low on cash? The answer is obvious for private car services firm Yidao: make an IPO. That would normally seem like a relatively smart and logical choice for most up-and-coming companies, but Yidao isn’t quite one of those. For starters, the company operates in an extremely competitive space now dominated by the likes of Didi Chuxing, UCar and Shouqi, just to name a few.
The other big factor weighing on the company is its majority ownership by cash-challenged online video company LeEco (Shenzhen: 300104). To be precise, LeEco paid $700 million for 70 percent of Yidao in 2015, back when both companies were far healthier than they are today. Thus this latest pronouncement that Yidao is even considering an IPO seems to hint that LeEco may be considering a sale of some of the many assets it acquired during a breakneck expansion that got it into its current mess. Read Full Post…
Bottom line: This year is likely to see at least a half dozen privately owned financial services companies make public listings in the U.S., Hong Kong and China, with Lakala and Lufax likely to be among the first.
Lakala files for ChiNext IPO
We’re already three months into the new year, and still awaiting the first of what looks set to be a bumper crop of IPOs by a new generation of privately owned financial services firms that are far more dynamic than their state-run peers. Two more of those are in the headlines today, led by China Rapid Finance, a peer-to-peer (P2P) lender that says it’s eyeing a $100 million IPO in New York. At the same time, the popular Lakala electronic payments service has filed to make a listing on the Nasdaq-style ChiNext board in Shenzhen.
That pair are joining a few other notable names that are reportedly aiming to list in the not-too-distant future. That group includes Lufax, which bills itself as China’s largest P2P lender and is aiming to list in Hong Kong. Then there’s Qudian, a microlender that is looking to raise hundreds of millions of dollars with a New York listing. And of course, the granddaddy of them all is Ant Financial, which could raise more than $1 billion with a listing in Hong Kong or dual listing in Hong Kong and China. Read Full Post…
Bottom line: iQiyi’s issue of convertible notes to raise its latest $1.5 billion shows it continues to post big losses, and investors are increasingly skeptical that it can become profitable in the next 2 years.
iQiyi lures investors with convertible notes
It seems no one is quite ready to believe that China’s cash-burning online video sites are ready for the profit column just yet. That seems to be the message coming from Baidu-backed (Nasdaq: BIDU) iQiyi, one of the leading players, which has just raised a fresh $1.5 billion via a convertible note issue. That would indicate that investors are hoping they can convert their notes into iQiyi stock when they come due, but can also simply collect back their money with interest instead. Read Full Post…
Bottom line: Alibaba’s Koubei is unlikely to gain major traction despite its $1.1 billion in new funding, due to its late arrival to a crowded O2O take-out dining space already dominated by Baidu, Ele.me and Meituan-Dianping.
Koubei raises $1.1 billion
The longer I stay in China, the more the latest stories coming from the Internet sector look like I’ve seen them before. That’s certainly the case with Koubei, the Alibaba (NYSE: BABA) online-to-offline (O2O) take-out dining delivery service, which is close to landing a fresh $1.1 billion in new funding. In this case, Alibaba’s extremely late arrival to the space looks a lot like its vain attempt to play catch-up to Tencent’s (HKEx: 700) WeChat with a service called Laiwang back in 2013. Read Full Post…
Bottom line: IDG Capital is likely to buy out the venture funding business of US affiliate IDG in the next year, setting the stage for the emergence of China’s first global venture capital firm.
IDG Capital roars with purchase of US parent
A sort of “mouse that roared” story is in the headlines today, with word that US tech finance and information giant International Data Group (IDG) has been bought out by its China affiliate. The China affiliate, IDG Capital, is actually teaming up with another major local partner, China Oceanwide Holdings, to purchase Boston-based IDG, whose assets include the well-respected market research firm International Data Corp (IDC), as well as PCWorld Magazine. Read Full Post…
Bottom line: Sogou is unlikely to make an IPO this year, despite new talk of potential for such a plan from its CEO, and may ultimately never list due to its lackluster performance.
Sogou floats another IPO plan
Online search engine Sogou is testing the market yet again for a potential IPO, hoping to spin a story of opportunity to grab market share from scandal-tainted industry leader Baidu (Nasdaq: BIDU). That story may sound attractive to investors unfamiliar with this perennial number-three in China’s search market, whose main shareholders are web portal Sohu (Nasdaq: SOHU) and Internet titan Tencent (HKEx: 700).
The only problem is that Sogou’s credibility is nearly nil these days, a direct result of the equally low credibility of controlling shareholder Sohu, which seizes on any opportunity to talk up IPOs for its various units. Accordingly, I will quite definitively go on the record saying this particular IPO won’t happen this year, and possibly not ever, regardless of what anyone at Sohu or Sogou says. Read Full Post…
Bottom line: iQiyi won’t make an IPO next year even though Baidu would like to get the company off its books, while Renren’s privatization marks one of the last buyouts for a US-listed Chinese firm from a wave dating back to last year.
iQiyi reportedly eyes 2017 IPO
The year 2016 is winding down as an unmemorable one for Chinese IPOs, thanks to a rocky start that cast a chill over the entire space. That said, the new year could be a bit more lively, amid signs that China’s securities regulator is opening the gates a bit wider to new offerings. That signal could bode well for offshore listings as well, with word that loss-making online video site iQiyi, controlled by online search leader Baidu (Nasdaq: BIDU), is contemplating such an offering next year. Read Full Post…
Bottom line: Meitu’s shares are likely to price and debut weakly due to skepticism about its profit potential from big western investors, but could perform better over the longer term if the beauty app can monetize its large user base.
Meitu sets IPO price range
What’s likely to be Hong Kong’s biggest high-tech IPO in nearly a decade is creeping ahead, with word that beauty app operator Meitu has set a price range for its widely watched offering that puts it within reach of its target to raise $750 million. But a read between the lines shows that this offering could easily price at the lower end of its range, following earlier investor worries that Meitu might have difficulty leveraging its huge customer base into meaningful profits anytime soon.
Meitu’s quandary is hardly unique, in an Internet universe where having huge user numbers doesn’t always translate to big profits. In this case Meitu, operator of an app that lets users tweak selfies to make themselves look more attractive, is quite rich in terms of traffic, with 450 million active users. But it hasn’t found a way to actually make money from that audience, and instead earns 95 percent of its revenue from sales of smartphones that draw people to its app. Read Full Post…
