Ossen Innovation Co., the Shanghai-based maker of rare earth-coated steel materials used in roads and bridges, raised $22.5 million in an initial public offering, capping a record year for Chinese IPOs in the U.S.
Ossen sold 5 million American depositary receipts at $4.50 each after offering 7 million ADRs for as much as $9 apiece, its filing with the Securities and Exchange Commission and data compiled by Bloomberg show. The company chopped its sale by 64 percent to attract enough buyers. Ossen, which began trading on the Nasdaq Stock Market today, fell 5.6 percent to $4.25.
The offering is the 41st U.S. IPO by a Chinese company in 2010, exceeding the 37 completed in 2007, data compiled by Bloomberg show. While three of the ten best performing IPOs on New York exchanges have come from China this year, only Youku.com Inc., E-Commerce China Dangdang Inc. and ISoftStone Holdings Ltd. have gained more than 5 percent since the Chinese government said on Nov. 17 that it may impose price controls.
“It has been a busy year for Chinese IPOs, but their performance has been very mixed,” said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees about $3 billion. Schuster didn’t buy Ossen’s shares.
Companies from China have accounted for almost 25 percent of the IPOs completed in the U.S. this year, according to data compiled by Bloomberg, raising almost $4 billion.
Chinese IPO Performance
While mainland IPOs have climbed an average of 16 percent in first-day trading this year, versus a 6.8 percent gain for all other U.S. offerings, seven Chinese companies that completed sales since Nov. 17 have left buyers with losses.
Youku.com, China’s largest online video company, China Dangdang, the nation’s biggest book retailer, and technology services provider ISoftStone have each advanced at least 33 percent since their IPOs. All three are based in Beijing.
“Most of the IPOs that are hot and which have seen the most upside are in consumer-related areas or technology areas,” said Schuster.
Ossen more than tripled its net income in the six months ended June 30 from the year-earlier period, as revenue increased 45 percent, its prospectus said.
Global Hunter Securities LLC and Knight Capital Group Inc. led the offering for Ossen, which will use the proceeds to expand its factory and add production lines.
2010 IPO Tally
A total of 193 companies have sold $47.8 billion of shares in U.S. initial offerings this year, more than double the $20.2 billion raised in 2009, according to data compiled by Bloomberg that excludes sales from over-allotment options.
The amount is the highest since $87.6 billion in IPOs were completed in 2007, when the Standard & Poor’s 500 Index, the benchmark gauge of American equity, climbed to an all-time high. Take away Detroit-based General Motors Co.’s sale of shares last month and the 2010 total decreases to $32 billion.
Swift Transportation Co. of Phoenix completed the second-largest U.S. IPO of the year behind GM last week, selling $806 million of shares. The biggest truckload carrier in North America raised about 20 percent less than originally sought.