Mr. Shangkong | China Inc is leaving Wall Street for wrong reason
Tech firms may credit change in Beijing's policy for re-listing on mainland, but greed is part of it
Have you noticed the new trend on Wall Street recently? China Inc, especially Chinese internet start-ups, are exiting via privatisations and will most likely re-list in China soon.
I'm a big fan of a free capital market so they should be able to go or stay wherever they like. But some of them may be leaving Wall Street for the wrong reason - valuations.
During the past two weeks more than half a dozen US-listed Chinese internet companies, including cybersecurity specialist Qihoo360 and social media network operator Renren, have announced plans to take their companies private, mostly by consortiums led by the senior management of those firms.
Such moves to leave Wall Street in a well-coordinated fashion come at a time when the Chinese government is keen to reform its own capital market and welcome overseas-listed Chinese internet companies back to the mainland stock market, partly to support Premier Li Keqiang's ambitious "internet plus" strategy.
To show its sincerity, Beijing plans to make it easier for companies under the so-called VIE structure to list at home. Internet companies, including many funded by international venture capital funds, won't need to set up a VIE, or variable interest entity, structure to go public abroad any more.
The majority of overseas-listed Chinese internet companies currently operate under the VIE structure which allows Chinese companies such as Alibaba Group to form a new corporation abroad that can get listed overseas.