Syswin Inc., a Beijing-based real- estate agency, slid 11 percent in its New York Stock Exchange debut, becoming the latest Chinese company to retreat this month following a U.S. initial public offering.
Syswin’s American depositary receipts declined 80 cents to $6.20 yesterday after the company sold 9.6 million ADRs at $7 each. The provider of services to property developers in 17 Chinese cities had already reduced the size of the IPO by as much as 50 percent, filings with the U.S. Securities and Exchange Commission and data compiled by Bloomberg show.
The sale was scheduled to be the last in the busiest month for IPOs of Chinese companies in the U.S. since at least 2000, data compiled by Bloomberg show. While mainland companies have accounted for three of the ten best performances among initial offerings on New York exchanges this year, the eight Chinese IPOs completed in November have gained 19 percentage points less than the average for 2010 amid concern that the country’s measures to curb inflation will slow its economy.
“Nobody is particularly excited to take a bunch of risk and buy an IPO,” said Timothy Cunningham, a money manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees about $70 billion. “China was ground zero for the hot IPO market. Those deals are going to get a little more scrutiny now.”
China Xiniya, SinoTech
Syswin’s retreat followed a 9.6 percent first-day slide on Nov. 23 for China Xiniya Fashion Ltd., a designer of men’s business clothes in China’s Fujian province. Beijing-based SinoTech Energy Ltd., which provides equipment and services to boost production from oil fields in China, tumbled 19 percent on Nov. 3, the biggest first-day decline for an IPO on U.S. exchanges this year, data compiled by Bloomberg show.
Concern that China’s efforts to curb inflation and Europe’s debt crisis will slow the global economy’s rebound from the worst recession since World War II has weighed on shares of mainland companies from New York to Hong Kong this week.
China’s government has stepped up a campaign to limit credit expansion in the past month as property prices surged. The country’s biggest banks are poised to hit government-set caps on lending and plan to stop expanding their loan books to avoid exceeding the annual quotas, according to four people with knowledge of the matter.
China Datang Corp. the nation’s second-largest power producer, is delaying the IPO of its renewable energy unit in Hong Kong, two people with knowledge of the plan said yesterday. Market conditions are affecting the valuation of the planned $1 billion IPO, they said.
Hong Kong IPOs
China New Materials Holdings Ltd., a chemical maker in eastern China, canceled its IPO press conference yesterday and has delayed its Hong Kong offering for at least two days, two people with knowledge of that sale said. Shanghai-based China Rongsheng Heavy Industries Group Holdings Ltd., which completed the fourth-biggest offering in Hong Kong this year, declined 12 percent from its Nov. 19 debut through yesterday.
Syswin will use the proceeds from its IPO to expand its business and for acquisitions, according to the filing.
The company’s revenue rose 53 percent to $64.5 million in the first nine months of 2010 from a year earlier, the filing showed. Net income increased 46 percent to $19.8 million.
Chinese IPOs had rallied this year in U.S. trading as the country posted the fastest growth among the world’s major economies. The nation’s economy will grow 9 percent next year, more than three times as fast as the U.S., according to estimates compiled by Bloomberg.
Mainland companies that went public in the first ten months of 2010 on U.S. exchanges have gained an average of 34 percent, compared with 15 percent for the eight that priced offerings in November, according to data compiled by Bloomberg.
“We used to have a few weeks ago these sentiment-driven IPO pricings whereby you see indiscriminate buying of Chinese ADRs,” said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees $3 billion. “But it’s becoming much more selective.”
ChinaCache International Holdings Ltd., the Beijing-based provider of content for business websites, had the biggest first-day rally on U.S. exchanges in three years on Oct. 1, jumping 95 percent, data compiled by Bloomberg show.
SouFun Holdings Ltd., the Beijing-based operator of China’s largest property website, surged 73 percent on Sept. 17 after selling its $125 million IPO at the top of the forecast range.
China Dangdang, Youku.com
E-Commerce China Dangdang Inc., a Beijing-based Internet retailer, plans to sell 17 million ADRs at $11 to $13 each on Dec. 7 in an offering led by Credit Suisse Group AG of Zurich and New York-based Morgan Stanley, according to an SEC filing this week and data compiled by Bloomberg.
Revenue for the seller of books and beauty and home products grew 56 percent to $235 million in the nine months ended Sept. 30 from a year earlier, the prospectus said. China Dangdang had net income of $2.39 million in the first three quarters of 2010 after posting a loss a year earlier.
Youku.com Inc., China’s biggest online video company, will seek to raise $169 million the same day selling 15.4 million ADRs at $9 to $11 each, according to the Beijing-based company’s SEC filing and data compiled by Bloomberg.
Goldman Sachs Group Inc. of New York will arrange the sale. Youku.com will use proceeds to upgrade technology, buy video content, and expand sales and marketing, the prospectus said.
Separately, Anacor Pharmaceuticals Inc., the Palo Alto, California-based developer of small-molecule therapeutics, climbed 1.8 percent to $5.09 in Nasdaq Stock Market trading yesterday after raising $60 million. The company originally sought as much as $84.6 million.
The offerings from Anacor and Syswin were scheduled to be the last in the biggest month for U.S. IPOs since March 2008, data compiled by Bloomberg show. Companies from Detroit-based General Motors Co. to LPL Investment Holdings Inc. raised more than $18 billion combined in November as the Standard & Poor’s 500 Index reached a two-year high on Nov. 5 before retreating.
GM sold $15.8 billion of common shares last week in the second-largest U.S. IPO on record, data compiled by Bloomberg show. Boston-based LPL, the brokerage and investment advisory firm owned by TPG Capital and Hellman & Friedman LLC, raised $517 million including its overallotment option.
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