Two Chinese Companies Head For Nasdaq IPOs
Two Chinese companies, Linktone Ltd. and TOM Online,
are headed for Nasdaq IPOs this week. Both companies are
expected to outperform the market because of their Chinese
backgrounds. The new listings are the first of Chinese
internet companies to follow on the success of the Ctrip.com
listing at the end of last year. Ctrip.com was able to
raise US$75.6 million from its listing.
Ctrip.com
had been profitable before its listing, having profited
from its travel call center before heading for Nasdaq.
Unlike in 1999, all of the new companies are either profitable,
or heading for profitability.
Linktone Ltd. is based in Shanghai, and its underwriter
is CSFB. It plans to offer 6.06 million ADS (American
Depository Shares) for between US$10-12 per share. TOM
Online, based in Beijing, has Citigroup and Morgan Stanley
as its underwriters, and will issue 11.25 million ADS.
Linktone Ltd. was profitable last year.
If the IPOs are successful, it will pave the way for
more Chinese company IPOs in the near future, as current
Wall Street interest in China is very strong.
Both companies offer wireless services and entertainment,
including ringtones, games, and fortune-telling.
The only corporate governance issues may be that both
companies are registered in the Cayman Islands, not in
China. ADS holders do not necessarily have voting rights.
ADS buyers can ask the company or organization holding
the ADS to vote on their behalf by proxy, but this can
occur only if there is an invitation to vote, which is
issued by the management of the two companies. Effectively,
this means that the companies' management have a veto
right.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
