The past year may be the busiest year for Chinese companies to list in the United States in the past 10 years. The number of listed companies hit a new high, but investors' harvests are not very good.
However, the new trading mechanism China Depository Receipts (CDRs) will be launched soon. It seems that spring breeze will awaken the land. Overseas listed Chinese technology unicorns are studying the formulation of domestic A-share listing plans. The latest news says that in the assessment of the Mainland After a variety of listing options, Alibaba may return to A shares as early as this summer.
Alibaba did not disclose the timetable and returned the details of the plan when it first responded to CBN. However, it confirmed one point: Ali repeatedly expressed this wish. Consider returning as long as conditions permit (A shares).
The CDR system is ready
In September 2014, Alibaba took the "China General Shares" strong momentum to land on the New York Stock Exchange for IPOs (initial public offerings). The popularity of US investors lining up for the subscription sensation.
Although most of the Chinese e-commerce giant's business and operations are in mainland China, the company is registered in the Cayman Islands. For a long time, Chinese law has prohibited overseas companies from offering shares directly to domestic investors. It also forbids companies like Alibaba. 2. A company with a dual equity structure is listed on the mainland.
But now the new trading mechanism will make it easier for Chinese investors to trade overseas stocks.
On March 15, Zhao Qingmin, vice chairman of the China Securities Regulatory Commission, said at the closing session of the National Committee of the Chinese People's Political Consultative Conference that the Chinese Depository Receipt (CDR) will be introduced soon. The CDR is a solution to the laws of the two places, and effective measures for the supervision of the two places. , Is conducive to listing, overseas delisting companies back to A shares listed.
Some foreign media quickly caught the news that Alibaba Group is planning to list in the domestic market via depository receipts, which may be carried out as early as the middle of this year.
Depository Receipt (DR) is a mainstream listing method in the international capital market. Taking Baidu, Alibaba, and Jingdong as examples, these Internet giants are listed in the United States to issue American Depository Receipts (ADRs). In addition, most of the medium-sized companies are also listed on the US stocks by way of issuance of depositary receipts. Because the United States has relevant securities laws, the registration of companies listed in the United States must be in the United States; companies that are not registered in the United States, only Can enter the U.S. capital market by way of depositary receipts.
Compared with direct listing, the benefits of issuance of depositary receipts are to avoid legal obstacles to direct listing, to reduce the company’s issuance costs, to avoid exchange troubles, etc., and the disadvantages mainly include the need to delegate voting rights, cross-border supervision difficulty and initial pricing. High risk to investors.
According to Citibank's data, in 2017, Chinese companies occupied the top four among the world's top five most liquid ADRs in terms of transaction amount, namely Alibaba, Baidu, Jingdong and NetEase. They went public through ADR. On the one hand, it is beneficial to its own development through raising funds, and on the other hand it can also bring good returns to overseas investors.
According to statistics, as of March 1, 2018, among these four companies, Alibaba’s cumulative return rate in the most recent year reached more than 80%, and Baidu’s and Jingdong’s cumulative yields were all above 40%.
The gates of the system have been opened. In this way, companies such as Jingdong, Tencent, Baidu, Weibo, and Sogou listed in overseas or Hong Kong are also expected to return to the A-share market.
US stocks are different
On March 21st, Cheehoo Mobile (CMCM.NYSE) CEO Fu Sheng jumped into the pool in Beijing's Water Cube and took a 'swimming straight ahead' posture. The Cheetah took the opportunity to launch 5 robots.
When talking about the return of A shares, Fu Sheng said that he is willing to try, but it still depends on the attitude and plan of the competent authorities.
Fu Sheng recently said in an interview with the media: 'If the cheetah is not listed, you may choose to re-select the domestic. US stocks and A shares are two extremes, ice and fire, the domestic is too high, overseas stocks are easy Generate a discount. '
In Fu Sheng’s view, the composition of the stocks of the U.S. stocks and the A shares is different. Most of the U.S. stocks are institutional investors. They mainly focus on corporate fundamentals. In the domestic market, retail investors tend to follow suit.
For the ups and downs in the United States, Li Zixue, the founder and CEO of the luxury e-commerce temple library (SECO.NASDAQ), has a deep understanding. He will always remember the situation on the day of listing and his own complex mood. 'Not long after the opening, the stock price It began to fall. When Nasdaq struck the bell, I deeply realized that (commercial traders) felt completely different when they were downstairs and when they were looking upstairs.
"When others quoted me for the stock price, I suddenly fell into a quandary. I feel that the world is so unfair. ' He felt that he had made sense to the First Financial reporter. 'I thought that in so many rounds of funding, the listing was nothing more than It's time to reconvene. It's nothing. But in fact it's very different in the US.
In Li Rixue's view, it is difficult for American investors to understand the concept and business model of Chinese companies. 'Even if Alibaba was listed in 2014, US investors did not understand it. ' Li Rixue said to the First Financial reporter.
IDG Capital Partners, Jeacy Yan, believes that: 'The American investors did not understand that Chinese companies do not have a relationship at first. As long as the companies use performance to speak, the value will be reflected in the stock price in the long term.'
Battle Waterloo
In 2017, the number of new Chinese companies listed in the United States reached 25, an increase of 125% over the same period. These 25 companies were from education, online shopping and finance industries.
However, according to data provider Dealogic's statistics, as of the end of 2017, of the 16 Chinese companies listed on the New York Stock Exchange or Nasdaq last year, there are still 10 companies whose stock prices are lower than the issue price. Some of these stocks are listed on the stock market. Began to fall.
One of the typical models is Fun Store. This Internet financial service platform, which was invested by Alibaba and was launched in the United States three years after its founding, has lost its share price to the issue price two months after listing and is still hovering in the low post.
It is difficult to get listed in the United States. Many Chinese companies newly listed in the United States suffered a setback last year, which not only caused losses to investors, but also undermined the confidence of a large number of Chinese companies wishing to go public in the United States.
After experiencing the IPO boom in 2013 and 2014, the number of IPOs of US stocks technology companies declined. From last year, technology companies have regained momentum. According to Ernst & Young's report, in 2017, one third of US IPO companies came from Technology and media industry. Last year, social media startup Snapchat and food delivery service startup Blue Apron became the two largest US IPO companies. However, after the listing, both companies' share prices also encountered Waterloo.
However, people in the industry believe that it is time for technology companies to reopen IPO windows. IPO expert, Class V Group founder Lise Buyer, told CBN: 'All types of technology companies are now starting with banks and auditors. Study IPO together, this window has been opened very large, IPO demand is very strong, and many new companies are also relatively reasonable pricing.
John Tuttle, global director of the NYSE’s listing department, also made the same statement. He believes that the US stock IPO market will be very active this year, and in particular will see a large number of technology companies listed. He also mentioned three preparations for this year. Chinese start-up companies listed in the United States: 哔哩哔哩 (hereinafter referred to as 'B station'), iQiyi and elite education.
Baidu’s iQiyi, a video streaming company of Baidu, is on a quest to raise up to 2.4 billion U.S. dollars in financing from the Nasdaq. It is expected to issue 125 million ADS in the United States with a price range of US$17 to US$19. Baidu’s shareholding in iQIYI More than 80%. iQIYI will use 10% of the financing amount for the investment in technology research and development. iQiyi currently has more than 400 million registered users. Baidu President Zhang Yaqin revealed at the Davos Forum this year, iQiyi and the United States. Streaming media giant Netflix will step up cooperation.
The other two start-up companies that will be listed in the United States this year are the streaming media video company 'B station' and after-school counseling service providers. The B-station is expected to have a maximum funding of US$525 million, and the issuance price range will be US$ 10.5. 12.5 U.S. dollars, and additional 6.3 million shares will be issued. Elite Education plans to raise 300 million U.S. dollars.
Greater opportunities in the Mainland and Hong Kong
However, some Chinese Internet companies have also switched to Hong Kong listings. For example, online loan company Dot Financial.com plans to raise at least US$500 million in Hong Kong IPOs this year. Xiaomi also plans to list in Hong Kong in the second half of this year, and may create a level of 100 billion US dollars. The scale of the IPO. Other promising listings in Hong Kong include Ping An's Internet financial company Lu Jinsuo and the live platform Yingke.
"Compared to the U.S. market, more Chinese companies will choose to list on the Chinese mainland or in Hong Kong in the future. 'The GGV management partner Tong Shihao told the First Financial reporter that 'US investors can understand that the number of Chinese Internet companies is Limitedly, it is difficult for them to bet on China or all bets on Chinese internet companies to spread the risks.
He also stated that there is little demand for Chinese companies financing in the United States because the demand in the Chinese market itself is already large enough. Therefore, in the future, a large number of Chinese companies will choose to list in Asia, and IPOs in the Chinese mainland and Hong Kong will increase.
As Internet giants Alibaba and Jingdong may choose to return to A shares in the future, Tong Shihao said to the First Financial reporter: “The first steps to go public in the United States and return to China are correct. Chinese investors are more aware of Chinese companies and their listing and exit mechanisms. However, he believes that listing in China may take some time. At this time, if Hong Kong can perform more positively, the improvement of the regulatory system will also attract many Chinese companies.
On December 15 last year, the Hong Kong market ushered in more than 20 years of major reforms. The Hong Kong Stock Exchange announced that it has officially broadened the current listing system and allowed companies with different shares to list on the main board. In those years, the Hong Kong market was unable to provide Alibaba with its Wanted governance structure, watched as this giant turned to New York for a huge $25 billion IPO.
In contrast, the NYSE and Nasdaq allow dual-tier ownership structures. This arrangement has been heavily utilized by entrepreneurs in the technology industry. Facebook and Google and other large US technology companies have adopted a two-tier shareholding structure. Under this ownership structure, the founders and management gain more voting rights. There is no need to worry about being dismissed or face hostile takeovers. Hedge funds and rights holders will find it more difficult to control the company’s decision-making power.