Chinese Internet firms rush for US IPO
Updated: 2011-05-09 09:38
SHANGHAI -- With two Chinese Internet firms landing the New York Stock Exchange (NYSE) last week and more expected to come, the US capital market is likely to see an IPO boom of Chinese companies in May.
NetQin Mobile Inc, a Chinese maker of cell phone Internet security software, made its debut on the NYSE on May 5, a day after shares of Renren Inc, one of the biggest social networking companies in China, surged 28.6 percent in their debut on the NYSE.
In the coming week, China's dating site Jiayuan.com and Phoenix New Media Limited (Phoenix) are expected to get their shares traded on the NYSE.
Some other companies have also shown their intentions to go public on the NYSE in May, including Shanghai-based TaoMee Inc, which runs www.61.com, a social-networking website for Chinese children, and Shenzhen Xunlei Network Technology Ltd, a video and music file-sharing company partly owned by Google Inc.
Analysts say the successful debut of Youku.com Inc, an online video website, and e-commerce company Dang Dang on the NYSE late last year might have encouraged more Chinese Internet companies to go public in the US
"Renren is definitely the star of this round of Chinese company IPOs in the US market. The company's success is rooted in the influence of the Internet on the Chinese people's social life," said Qiu Yanying, an analyst with TX Investment Consulting.
Shanghai businessman Zhu Linjun, 32, said he spent half of his day on the Internet. "I used to spend most time online browsing news, writing emails and searching for data. Now I'm almost always on the social-networking web sites," he said.
Now Zhu chats with his friends, talks with clients and associates, learns about the news through the two top Chinese social networking web sites: Renren.com and Kaixin001.com.
China has more than 270 million users of social networking websites, creating a market worth more than $2 billion. The numbers are likely to double in two years, according to statistics with Analysts International, a leading consulting company on China's Internet market.
Yet some analysts say the investors should be wary of bubbles. Their worries were echoed by the plunge in the stock price of NetQin during its debut.
The company's stock closed at $9.3 a share, down 19 percent from its IPO price of $11.5.
"American companies blew the dot-com bubble 10 year ago. Now it's the Chinese companies," said Zhang Chaoyang, chairman of Sohu.com, a major Chinese portal website also listed on the NYSE.
Deutsche Bank analyst Alan Hellawell said the scarcity of NYSE listed Chinese stocks will diminish as more Chinese Internet companies go public in the US, lowering IPO prices in the future.
But he also said that the market's enthusiasm is justified because China is the largest market in terms of Internet subscribers.
"Also, scores of companies are demonstrating profitable business models, which is different from the 1999-2000 period when a lot of companies that raised large venture capital were losing heavily," he added.
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