The following press releases and news reports about China companies were carried on May 13. To view a full article or story, click on the link next to the headline.
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BOC Aviation Prices IPO, to Raise up to $1.3 Bln (HKEx announcement)
Bottom line: The CSRC’s reported plans for a backdoor listing quota for companies returning to China from New York should restore confidence that well-conceived buyout plans by big names like Qihoo will succeed.
Regulator reopens gate for backdoor listings in China
After a massive sell-off at the beginning of the week on concerns of a major new roadblock to their homecoming plans, Chinese companies privatizing from New York have seen their shares rebound sharply on reports of a regulatory compromise that would allow them to re-list in China. The story is mostly based on rumors about an internal debate within the China Securities Regulatory Commission (CSRC), China’s stock regulator, which is worried about a potential future flood of backdoor listings by local companies now privatizing from New York.
The sell-off for companies like Qihoo (NYSE: QIHU), Momo (Nasdaq: MOMO) and 21Vianet (Nasdaq: VNET) at the start of this week came after reports emerged saying the CSRC might halt all such backdoor listings, which typically see a company inject its assets into an existing listed shell company. The regulator took the unusual step of saying it was simply studying the issue, but that didn’t ease concerns that New York privatization bids for Qihoo and others might collapse if backdoor re-listing route in China was closed. Read Full Post…
The following press releases and news reports about China companies were carried on May 11. To view a full article or story, click on the link next to the headline.
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Bottom line: Many privatization bids by Chinese firms hoping to re-list in China could collapse if the CSRC cracks down on backdoor listings, though de-listing plans backed by big private equity names could still succeed.
Privatizing shares tumble on CSRC rumors
Rumors that they might get a chilly reception from China’s securities regulator has sparked a major sell-off for shares of US-traded companies trying to privatize and re-list at home in search of higher valuations. The dive is one of the largest I’ve seen for any single group in quite a while, and could present a great buying opportunity for anyone who believes these companies can still successfully privatize and re-list in China.
But in this case I might be more inclined to agree with the pessimists, since China’s securities regulator is quite conservative, even though I’ve said it should continue to allow these re-listings. (previous post) In this case the China Securities Regulatory Commission (CSRC) may also be acting under direct orders from Beijing, which is already worried about another major sell-off on domestic stock exchanges like one early this year. Read Full Post…
Bottom line: The CSRC should take steps to better regulate backdoor listings by Chinese companies privatizing from New York to ensure market stability, but shouldn’t ban the process completely.
CSRC weighs closing backdoor listings
Chinese companies planning to re-list at home after disappointing results with overseas IPOs got some troublesome signals last week, when rumors emerged that China’s securities regulator might be planning to slow or halt a mechanism that has quickly become the preferred route for such homecomings.
That mechanism has seen newly privatized companies make back-door listings using Shenzhen- and Shanghai-traded firms that are often just shells of former state-run enterprises whose own businesses have withered. Returning companies have chosen such a path because conventional IPOs in China have slowed to a crawl due to the regulator’s concerns about market volatility, creating a huge waiting line for new listings. Read Full Post…
Bottom line: A hospital scandal surrounding Baidu could shave as much as another 3-5 percent off its stock over the next week, but will fade afterwards and have relatively little longer term impact.
Hospital scandal continues to rock Baidu
A scandal involving exaggerated claims by one of its advertisers continues to consume Internet search leader Baidu (Nasdaq: BIDU), which has fired a top executive in response to a story that has wiped out $6 billion from its market value. At the same time, Qihoo’s (NYSE: QIHU) rival search engine has announced it will no longer do business with hospitals like the one at the center of the scandal, nor with other sellers of medical products and services.
The government has taken the unusual step of assembling inter-agency task forces to investigate the case involving a young cancer patient who claimed he was misled by both Baidu and the Second Hospital of Beijing Armed Police Force. (Chinese article) As the scandal picked up momentum late last week, media are reporting that Baidu fired vice president Wang Zhan for harming the company.(Chinese article) Read Full Post…
The following press releases and news reports about China companies were carried on May 4. To view a full article or story, click on the link next to the headline.
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Tencent (HKEx: 700) Venture Poaches Google Talent as Chinese Techs Pile into Autos (English article)
SAIC Begins Mass Production for Car Jointly Produced With Alibaba (NYSE: BABA) (Chinese article)
Bottom line: 21Vianet’s new convertible bond indicates it may be abandoning its previous plan to privatize from New York, and could help to boost its shares by bringing in more investors from China.
21Vianet abandoning privatization?
Nearly a year after announcing a plan to privatize from New York, data center operator 21Vianet (Nasdaq: VNET) has just issued an unusual plan that could see it sell a major stake of itself to a group of Chinese buyers through a convertible bond issue. The plan comes as quite a surprise, since one wouldn’t expect this kind of move from a company that was expecting to imminently privatize.
Accordingly, we could interpret this move as hinting that 21Vianet is quietly abandoning its de-listing plan in favor of an approach that could appeal to many other US-listed Chinese companies whose own privatizations have also stalled over the last year. Such an approach would see these companies bring in major new Chinese investors through this kind of convertible bond issue, which could ultimately help those companies to achieve their target of raising their valuations. Read Full Post…
Bottom line: New IPOs from metals trading specialist Yintech in New York and aircraft leaser BOC Aviation will meet with lukewarm reception that sees them price in the middle of their range and post flat trading debuts.
Yintech banks on precious metals trading
A couple of IPO stories are in the headlines, including the first major offering of a Chinese company in New York this year set to take place by metals exchange operator Yintech. Meantime in Hong Kong, the airline leasing unit connected to Bank of China (HKEx: 3988; Shanghai: 601398) is also sniffing for interest in its plan for an offering to raise up to $1.5 billion.
Each of these IPO stories is quite different, in terms of size, industry and stage of development. But a common theme is that both come from relatively traditional older industries in China, rather than the high-growth tech and media sectors that more typically like to list offshore. To the contrary, this year has seen many of those high-growth companies like Qihoo (NYSE: QIHU) and E-House (NYSE: EJ) de-list from New York after failing to attract enough interest from US investors. Read Full Post…
Bottom line: Focus Media’s first major fund raising and lofty valuation following its backdoor listing in China shows such homecomings can be lucrative, but are also very time consuming, complex and not guaranteed to succeed.
Focus Media in first cash raising since backdoor listing
Focus Media has just announced its first major cash-raising exercise since its privatization from New York and return to China through a backdoor listing, and the results look quite encouraging. The company said it plans to raise 5 billion yuan, or nearly $800 million, by issuing new shares after making the homecoming through a shell company called Hedy Holdings (Shenzhen: 002027).
But what’s really impressive is the valuation that Focus, a provider of advertising services, has gotten as it leads a group of Chinese companies that are abandoning New York listings to return home to China. According to data from 2 reputable websites, Hedy Holdings now has a market value of 150 billion yuan, or about $23 billion. If that’s correct, it would be nearly 6 times what Focus was worth when it launched its plan to privatize in 2012. Read Full Post…
Bottom line: Qihoo’s privatization is likely to succeed after shareholder approval of its buyout offer, though many similar pending deals could collapse and might consider strategic stake sales like the new one by LightInTheBox.
Shareholders approve Qihoo buyout
The volume of noise coming from Chinese companies privatizing from New York has dropped sharply in the last month, reflecting volatility in their home market where many hope to one day re-list. But 2 major new stories from that wave are back in the headlines, led by shareholder approval for what would be the biggest privatization so far for security software specialist Qihoo 360 (NYSE: QIHU).
At the same time, the much smaller e-commerce firm LightInTheBox (NYSE: LITB) has just closed another deal that looks less radical than an outright privatization and could provide an alternative template for companies seeking to attract more investor attention. That deal has the company selling 30 percent of itself to Hong Kong-listed Zall Development (HKEx: 2098), which paid a large premium for the stake. Read Full Post…
