China IPOs in US expands at record pace
Updated: 2007-11-13 15:23
Only two Chinese companies, or 8 percent, went public at a discount, while among all other IPOs, 28 percent, or 48 companies, had to accept discounts. Two Chinese companies matched underwriters' predictions, while 89, or 51 percent, of other IPOs went public at the predicted price.
The fourth quarter is usually a strong one for IPOs, and there is a good chance that more Chinese companies will be trading on the NYSE and Nasdaq this year. It is difficult to predict the precise number because it can take many months for a company to go public after filing its official IPO application.
However, if there is sufficient demand, public offerings can occur with lighting speed.
In early November, a pair of Chinese companies -- the farm products maker Agria and the air travel advertising firm AirMedia Group -- started trading within three weeks of filing IPO applications.
Whether the China IPO trend can continue depends on the strength of the Chinese economy and the appetite of US investors. One factor that might discourage China's companies from going public in America is the cost.
Lu said it costs three to four times more for an IPO listing on New York Stock Exchange than on China's Shenzhen Exchange for small and midsize companies. The regulatory requirements under the Sarbanes-Oxley law, as well as the fees for legal, accounting, and financial consulting contribute to the higher expenses.
"If homegrown exchanges in Asia become more reputable," Stiller added, "Chinese firms may be less inclined to pursue IPOs in the US."
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