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Business / Economy

Chinese companies are flocking to US for IPOS

By Cai Xiao (China Daily) Updated: 2014-02-27 03:19

About 15 to 20 companies from China are expected to go public in the United States this year amid restored investor confidence in the nation's companies, a senior executive of the stock exchange in New York said on Wednesday.

The new listings from China will mainly be in the health, high-technology and retail sectors.

"China has become the third-largest country by the number of companies listed on NYSE Euronext, following the United States and Canada," said David Ethridge, senior vice-president and head of capital markets at NYSE Euronext Inc, which operates equity exchanges around the world.

As of Nov 30, 2013, there were 74 Chinese companies listed on the New York Stock Exchange and nine on a smaller subsidiary exchange established specifically for small-capitalization companies. These companies' total market capitalization stood at $1.04 trillion on that date.

Ethridge said that China will remain in the top three because of Chinese companies' desire to list on the exchange as well as renewed investor confidence in such listings.

Starting in late 2010, the shares of US-listed Chinese companies were targeted by short-sellers. The situation became so serious in the fourth quarter of 2011 that 58 Chinese companies faced the prospect of being delisted in the US.

Their share prices recovered slightly in the first half of 2013. In the second half, conditions improved greatly, with the prices of 50 percent of those companies up more than 50 percent year-on-year. Discount online seller Vipshop Holdings Ltd even saw its price increase 369 percent last year.

Higher share prices led to renewed confidence among investors. At the same time, Chinese companies became more positive about conducting IPOs in the US.

Six Chinese companies listed there last year, raising $720 million, compared with just two IPOs in 2012.

That reflected a major decline from 2010, when 34 Chinese companies went public in the US.

Global investors are now paying closer attention to the quality of Chinese companies and conducting intensive due diligence. That's in marked contrast to 2010, when almost all Chinese companies were popular, according to a report by the NYSE.

The US market is particularly attractive for Chinese Internet companies, and their performances in the capital markets there have been "pretty good", said Ethridge.

The six US-listed companies last year were all in the Internet sector.

As of the end of 2013, the individual market capitalization of more than half of the Chinese Internet companies listed in US exceeded $1 billion.

Chinese companies planning IPOs in the US have become more cautious in choosing banks, accounting firms and law firms for their IPOs, said the report.

The micro-blogging site Weibo is reportedly heading for a market listing in New York with a valuation of as much as $8 billion.

Nasdaq-listed Sina Corp, which owns 71 percent of Weibo, is looking to raise more than $500 million through the deal, which is expected to take place in the second quarter

Jumei.com, an e-commerce company that sells cosmetics, is planning a US IPO and will seek to raise about $500 million.

Another e-commerce site, JD.com, recently filed documents indicating plans to raise $1.5 billion in a New York offering.

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