IPOs: Fosun Pharma Tries Again, China Auto Stalls 上市：复星医药再次尝试，神州租车紧急暂停

By newsdoug on April 25, 2012

Fosun Pharma re-files for $800 mln IPO The prolonged winter for Chinese stocks listing overseas is clearly continuing, based on the latest IPO news that has seen one company delay its planned New York offering while another is making a second try at a Hong Kong listing. What’s perhaps significant in both of these cases is that neither company is a riskier tech start-up, and instead both come from mature industries with more dependable track records, meaning this IPO winter could be longer and deeper than many initially expected. The first development has seen auto rental specialist China Auto delay its already late New York IPO due to anemic demand; while the second has seen drug maker Fosun Pharmaceutical relaunch its own Hong Kong IPO after abandoning the deal last year. Let’s first look at China Auto, whose last-minute decision to delay its IPO should come as a surprise to no one. (Chinese article) Signs of trouble were already emerging earlier this week for what would have been the second offering this year by a Chinese firm in New York, where investor sentiment remains weak following a series of accounting scandals last year. Foreign media previously reported the offering, which initially hoped to raise up to $300 million when China Auto made its first public filing in January, was getting anemic demand and that buyers had ordered only half of the shares for sale just a day before the offering was set to price. I predicted the offering could ultimately raise around a quarter of its original target, and now it appears perhaps even that was an optimistic forecast. (previous post) In light of this latest delay, I wouldn’t be surprised if China Auto abandons the offering completely and waits for sentiment to improve. Meantime, Fosun Pharmaceutical has been approved to raise up to $800 million in a Hong Kong offering, according to numerous media reports. (English article) Anyone with a long enough memory might recall that Fosun Pharmaceutical originally filed to make a Hong Kong IPO worth up to $1 billion a little more than a year ago, but then never completed the plan. (previous post) No reason was ever given for the withdrawal of last year’s plan, which should have been attractive as it offered a window into China’s fast-growing health care industry. Clearly sentiment was much better at this time last year, so the fact that Fosun Pharma is relaunching its IPO in such a weak climate now probably reflects that it desperately needs cash. If that’s the case, look for this offering to also meet with weak demand, and for the company to ultimately raise far less than the $800 million it is targeting.

Bottom line: The latest IPO developments from China Auto and Fosun Pharma indicate the current winter for Chinese overseas IPOs could last for at least a few more months.

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