Fund Raising: Maps, Milk and Vancl 丁丁网与华夏畜牧获得新融资 凡客或很快赴美上市
A flurry of fund-raising news is making the headlines today, showing that private equity and venture capitalists are still hard at work investing in China, even as many of their traditional favorites in the overheated Internet space are getting the cold shoulder. At the same time, the inevitable has finally happened with the first concrete report that cash-challenged clothing retailer Vancl has re-started its long-delayed IPO process, with an aim of making a public listing in New York potentially by the end of this year.
Let’s start with the smaller fund-raising news first, since I’ve already written several times this week about a new wave of IPOs taking shape that could see one or more Chinese Internet firms list in New York by year-end. Both of these smaller deals appear to be in the mid-sized range, led by an announcement that premium dairy products maker Huaxia Dairy has landed $50 million in new funding from an offshore group whose members include Olympus Capital and California Technology Investors. (company announcement)
The second similar news bit has a mapping services provider called Ding Ding Map landing a new round of funding from a group that includes e-commerce leader Alibaba and a unit of Citigroup (NYSE: C). (English article) The reports didn’t provide a specific amount for the funding. But the investment would be the fifth funding round for the company, meaning it would presumably also be in the $30-$50 million range.
The Huaxia investment looks interesting due to its position in the scandal-plagued food sector. China has been wracked by a non-stop series of food safety controversies that started with a milk-tainting scandal around 5 years ago. As a result, consumers are now often reluctant to buy domestic dairy products and often pay big premiums to buy imported goods instead. Thus if Huaxia can position itself as a safe domestic brand that adheres to foreign standards, it could quickly find a strong market from Chinese consumers willing to pay a bit extra for its products.
Meantime, I also like the Ding Ding deal, as it comes in another fast growing area, namely for mobile- and web-based mapping services. China has no clear leader in this space at the moment, even as demand looks set to explode based on development of a new generation of mobile location-based applications for smartphones. This new investment means that Ding Ding can also count on Alibaba as a strategic partner and potential user of its future products and services.
The relatively large size of these fundings means both companies are relatively advanced, and could be candidates for M&A or IPOs as soon as next year if and when financial markets improve.
On that note, we should take a look at the latest reports on Vancl, the online clothing retailer that had to shelve earlier plans for a New York IPO last year after market sentiment tanked due to an investor confidence crisis for US-listed China stocks. Several Chinese firms are reportedly testing the waters for US IPOs before the end of the year, and now media are reporting that Vancl has relaunched its own listing bid. (Chinese article)
The reports also say that Vancl is on the verge of becoming profitable in the fourth quarter, which will undoubtly help to attract investors skeptical about buying shares of another money-losing company. I suspect this sudden move into the profit column may be at least partly due to accounting tricks, though it is possible the company could be close to break even after implementing a series of cost cutting moves earlier this year. I wouldn’t be surprised at all to see an initial IPO filing from Vancl in the next couple of weeks, and perhaps this company could finally make its long awaited market debut with an offering to raise around $100-$200 million.
Bottom line: New funding for firms in the mapping and high-end dairy spaces show investors are diversifying beyond the Internet, while online clothing seller Vancl could soon file for a US IPO.
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