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: Wowo’s merger with a major food service B2B platform looks broadly positive, giving it a new business with better growth potential than its core group buying service.
Wowo in food transformation
Just 2 months after its delayed and underwhelming New York IPO, group buying site Wowo (Nasdaq: WOWO) is undergoing a radical transformation by merging with a B2B site used by the food service industry. Wowo, which until recently was known as 55Tuan, is billing this particular merger as a purchase of Join Me Group, or JMU, in a deal that it says will create China’s largest food service Internet company. But the reality is that Wowo appears to be the one getting swallowed up by the larger JMU in this deal, which would end its very brief life as China’s first publicly listed group buying site.
Investors who bought into Wowo’s April IPO thinking they were getting a group buying site similar to US leader Groupon (Nasdaq: GRPN) weren’t impressed by this sudden transformation, bidding Wowo shares down by 8.3 percent and another 4.5 percent in regular and after hours trade after the deal was announced. Still, it’s noteworthy that after the sell-off the shares were still at $10.50, or just a tad above their IPO price of $10. Before rumors of this deal first appeared, the shares had been trading well below the IPO price. Read Full Post…
Bottom line: P2P lenders like Lufax and Jimu Box have become the latest hot ticket for Chinese Internet investors, and one or more could make an IPO later this year to seize on the positive sentiment.
Lufax raises $500 mln
I remember a time not long ago when China tech deals worth just $10-$20 million were considered big and worthy of news, as such sums looked big when the sector was just starting to develop. Nowadays the threshold has risen sharply as both domestic and international investors flood into the space. That’s definitely the case with the latest mega-deal, which has seen peer-to-peer (P2P) lending platform operator Lufax raise a cool $485 million in new funding round, a record for the fast-emerging space.
Bottom line: Alibaba, Tencent and Ping An’s online insurance joint venture should easily find backers for its first major fund-raising, and could even exceed its $8 billion valuation target due to strong demand.
Zhong An targets $1 bln in new funds
This year’s list of major private funding raising by high-tech firms continues, with word that an online insurance joint venture involving 2 of China’s biggest Internet names is seeking to raise a hefty $1 billion in its first funding round. This particular venture certainly has a strong pedigree, as it’s backed by Alibaba (NYSE: BABA) and Tencent (HKEx: 700), China’s 2 leading Internet companies with a combined market value of nearly $400 billion. The pair are joined in the venture by Ping An (HKEx: 2318; Shanghai: 601318), China’s second largest insurer and also one of the most aggressive players in its space. Read Full Post…
Bottom line: Dianping’s bigger-than-expected fund-raising underscores its popularity among investors, and could pressure it to make an IPO worth $1 billion or more this year to capitalize on positive market sentiment.
Dianping closes $850 mln funding
China’s online group buying space could be closer to getting its first IPO, with word that Dianping, one of the industry’s 2 leaders, has just raised a whopping $850 million in its fifth funding round. The massive funding has actually been in the works since late last year, but kept growing as more investors clamored for a piece of this hot company. The move sends the latest signal that Dianping may be eying an IPO later this year that could raise up to $1 billion or more.
Word of the funding comes as a more advanced IPO plan has gone missing from smaller rival 55Tuan, which was hoping to become China’s first publicly listed group buying site. 55Tuan made a public filing for a New York IPO back in January, and a later filing indicated it planned to sell its shares and begin trading on February 25. But that date has come and gone with no listing, and there’s still no word on the reason for the delays more than 2 weeks later. Read Full Post…
Bottom line: A mega IPO by Postal Savings Bank next year is likely to attract little or no interest from private investors, while an upcoming IPO by 55Tuan could do slightly better but will still get only a lukewarm reception.
55Tun misses pricing target date
A couple of unattractive IPOs are in the headlines as China gets back to work after the Lunar New Year holiday, led by a massive plan by China’s Postal Savings Bank to raise up to $25 billion as soon as next year. While that plan may be a year or more away, a more advanced listing by group-buying site 55Tuan has failed to price its shares by a previously announced target date, leading some to speculate that the deal is running into trouble. Neither of these deals looks very exciting to me, and I suspect they won’t attract much interest from private investors either. Read Full Post…
Bottom line: China’s overall Internet growth will continue to slow as the market starts to become saturated, with messaging and other mobile services continuing to steal share from microblogging and video operators.
Microblogging decline bites Weibo
A newly released annual government report on China’s Internet is full of good news for the online business community, with most sectors posting double-digit growth as overall penetration neared the 50 percent mark. But a few sectors stood out as distinctive losers in the report from the China Internet Network Information Center (CNNIC), led by the microblogging space that saw a sharp decline in users.
That’s not too surprising due to departures or pull-backs in the space last year by big names like NetEase (Nasdaq: NTES) and Tencent (HKEx: 700), though it certainly doesn’t bode too well for sector giant Sina Weibo (Nasdaq: WB). Another relative loser was online video, which posted only tiny growth last year as the sector came under regulatory assault aimed at reining in companies like Youku Tudou (NYSE: YOKU) and Baidu’s (Nasdaq: BIDU) iQiyi. Read Full Post…
Bottom line: This year is likely to see 6-9 New York IPOs by Chinese tech firms, mostly in the $50-$100 million range, while Legend’s planned IPO in Hong Kong or China is likely to get a mixed reception.
Lenovo parent Legend eyes H2 IPO
A new forecast on Chinese high-tech IPOs for the year ahead is stating the obvious, namely that new listings are set to slow dramatically in 2015 after a bumper harvest in 2014. In fact, the record year for fund-raising in 2014 is a bit misleading, as it really represents about 3 years worth of offerings that accumulated during a frosty period that led to a near freeze for IPOs starting in 2011. Now that much of the backlog has been cleared, it’s not surprising that there are few major new companies that are still at the right stage of development for listings.
At the same time, another report says that Legend Holdings, parent of PC giant Lenovo (HKEx: 992), has decided to list in Hong Kong, forgoing previous plans to make an IPO in its home China market. That decision isn’t a huge surprise if it’s true, and could provide a highlight for international tech investors in this year’s muted IPO parade for high-tech firms. Read Full Post…
Bottom line: 55Tuan’s listing plan stands a 50 percent chance of succeeding due to its modest size and broadly positive market sentiment, but could ultimately fail due to its loss-making status.
55Tuan files for Nasdaq IPO
I spent much of December predicting we’d see the first listing of a Chinese group buying site this year, and now that may happen with the first official IPO filing by a Chinese Internet company in 2015. But my prediction that the listing would come from sector leaders Dianping or Meituan was off the mark, and now it appears that 55Tuan may take the prize as China’s first listed group buying site. It’s still not completely certain that 55Tuan will be the first, since the company made previous attempts at such an offering but ultimately had to scrap the deal due to lack of interest. Read Full Post…
Bottom line: Dianping’s major new fund raising is likely to be its last before a New York IPO, which could come as soon as the first half of next year and raise up to $800 million.
Dianping in major new fund raising
I’m having a slight feeling of deja vu today, after reading the latest reports that restaurant ratings and group buying site Dianping has just won a major new funding round worth nearly $800 million. This particular news comes just a week after similar reports came out saying that rival group buying site Meituan was on the cusp of closing a new funding round totaling $700 million, in one of the biggest such private investments for China’s Internet sector this year. Internet watchers will recall that the last time we saw this kind of fund-raising flurry around a single industry came nearly 4 years ago, when investors poured hundreds of millions of dollars into the very same group buying space. Read Full Post…
Bottom line: Dianping or Meituan is likely to mount an IPO bid next year, in a deal that could value either at around $5-10 billion and win a premium as China’s first group buying site to list.
Meituan gets new mega-funding
China’s newly consolidated group buying sector could be close to making its first IPO, with word that leading operator Meituan is on the cusp of landing a massive $700 million in new funding. Such a huge amount would be the company’s fourth round of funding since 2010, and would follow not long after it reportedly raised $300 million earlier this year. That kind of funding frenzy often comes just before an IPO, which leads me to expect we could finally see Meituan become China’s first publicly listed group buying Internet company with a New York IPO perhaps in the first half of next year. Read Full Post…
