Xinhua Finance Media on takeover trail after listing raises US$204m

Xinhua Finance Media, a financial news provider focused on mainland markets, raised net proceeds of about US$204 million with an initial public offering on the Nasdaq.

The shares fell as much as 8.6 per cent in their first day of trading in New York yesterday.

Market sources said the company priced its American depositary shares at US$13 each after setting an indicative price range of US$12 to US$14.

The company sold 23.1 million ADSs, each one equivalent to two ordinary shares, to gross about US$300 million.

Its prospectus stated that about US$50 million of the listing proceeds would be used to pay back debts to parent company Xinhua Finance.

The balance would be used for mergers and acquisitions and general working capital. The company said it had not yet entered into advanced discussions or negotiations regarding potential acquisitions.

'Pricing in the mid-range was a good performance, given the recent turbulence in global markets,' a source said. He said United States investors were making a bet on the strong growth potential of mainland news media.

But by midday yesterday, the shares were trading at US$11.90, after earlier reaching US$11.88.

JP Morgan and UBS were the joint sponsors of the sale.

Xinhua Finance Media posted revenues of US$58 million last year, compared with US$5.39 million for the period from May 26, 2005 - when Tokyo-listed Xinhua Finance took a 60 per cent stake in the company - to December 31, 2005.

Advertising accounted for 76 per cent of total revenues last year. Apart from financial news, the company is involved in television production, radio, newspaper publishing and market research.

The company's net profit of US$3.34 million last year was up by US$1.35 million from the year before.

Xinhua Finance Media holds exclusive rights to sell advertising in several Chinese publications.

Xinhua Finance, which now holds 36.6 per cent of the firm, provides China-focused and international financial information. New York-based Patriarch Partners Media Holdings owns 8 per cent while Fredy Bush, chairwoman and chief executive, owns 5.8 per cent.