FUND RAISING: Legend Eyes $3 Bln HK IPO, Mango TV Gets Big Funds
Bottom line: Legend’s Hong Kong IPO this year will attract moderate interest and raise more than $2 billion, while Mango TV could seek up to $800 million in new private funding later this year en route to a potential Hong Kong IPO as soon as 2017.
Two big fund-raising stories are in the headlines today, casting a spotlight on what could become 2 major IPOs in the pipeline over the next 2 years. The more advanced deal has media reporting that Legend Holdings, parent of PC giant Lenovo (HKEx: 992), is aiming to raise a hefty $3 billion when it goes public later this year in Hong Kong. The second deal has Mango TV, the online video unit of the commercially savvy broadcaster Hunan TV, raising a cool 1 billion yuan ($161 million) in its first private funding round. Such a sum is quite large for a first round of outside fund raising, and the acceptance of private investors hints that Hunan intends to build Mango into an attractive IPO candidate with strong prospects in the online video space.
Let’s begin this fund-raising round-up with Legend, whose colorful chief Liu Chuanzhi has been talking about a 2015 IPO for much of the last 2 years. This particular offering was last in the headlines back in January, when media reported the company had settled on Hong Kong for the listing after previously planning to offer shares on one of China’s domestic stock exchanges. (previous post) Those reports added that the offering was likely to come in the second half of this year, with a fund-raising target of $2-$3 billion.
Now the latest reports indicate the plan is advancing on schedule, with Legend now aiming for an IPO in July with the $3 billion upper limit confirmed as its fund-raising target. (English article; Chinese article) If it reached that upper limit, the offering would be one of the biggest for Hong Kong in the last 2 years, approaching the $3.2 billion raised by nuclear power plant builder CGN Power (HKEx: 1816) when it listed in the market late last year. (previous post)
The latest reports say leading Chinese investment bank CICC and Europe’s UBS are lead underwriters for the deal, and that Legend will formally seek permission for a listing at a hearing with the securities regulator in Hong Kong later this week. The company’s largest holding is its controlling stake in Lenovo, but it’s also far more diversified with assets in a range of other areas, many held by its Hony Capital private equity arm. I’ve previously said the offering could get a moderately strong reception due to Legend’s diversified nature, and would reaffirm that outlook as the deal moves forward.
I’m a bit more excited by the Mango TV deal, which has seen the company turn to outside investors for the first time with this 1 billion yuan fund-raising. (English article) The deal has seen Mango’s owner, Hunan TV, sell 10 percent of the company to a group led by China Mobile (HKEx: 941; NYSE: CHL), China’s dominant mobile carrier with two-thirds of the massive market. That values Mango at 10 billion yuan, or about $1.6 billion, instantly making it one of the sector’s most valuable players.
Media first reported last summer that Hunan TV was preparing to pump 1 billion yuan into Mango, and this funding appears to be part of that move. (previous post) The broadcaster is already known as one of China’s most successful and commercially focused state-run program makers, operating the highly popular Hunan Satellite TV station. Its more recent foray into online broadcasting reflects its commercial savvy, and this pairing with China Mobile will give Mango preferential access to China Mobile’s 800 million subscribers, many of whom watch online video over their phones.
This acceptance of outside funding strongly that Hunan TV intends to make Mango a compelling, standalone online video company, capable of competing with the likes of sector leaders like LeTV (Shenzhen: 300104), Youku Tudou (NYSE: YOKU) and Baidu’s (Nasdaq: BIDU) iQyi. Accordingly, we can probably expect to see the company raise even bigger funds from both Chinese and international investors over the next 1-2 years, with a well-received IPO in either Hong Kong or on one of China’s domestic markets possible as soon as the first half of 2017.
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