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Tulip Mega Media, an electronic advertising company run by Olympic gold medallist Zhuang Yong, plans to raise as much as US$200 million from an initial public offering in New York,  sources said.

Credit Suisse would arrange the sale, which would probably come early next year,  the sources said.

The company was preparing for a share offering but no formal plan was in place, a Tulip spokesperson said.

The Shanghai-based company sells advertising space on billboard-sized electronic light-emitting diode (LED) screens. It had 10,000 square metres of advertising space from 14 screens for sale at the end of April in a dozen mainland cities. The firm plans to have 35 screens up by the  Olympic Games in Beijing next year.

'LED screens are effective for brand advertising as they are placed at traffic hubs and have a high virtual impact to people passing by, but there are limited traffic hubs in each city,' said Richard Ji, the head of technology research at Morgan Stanley.

'Whether Tulip can emerge as a leader of the sector depends on how many traffic hubs it can secure to place its LCD screens, but the cost for securing those locations might be high.'

The company has raised US$70 million in venture capital financing over the past year. The latest round came from Credit Suisse, which put US$30 million in the company in April, according to mainland news portal QQ.com.

Private equity group Warburg Pincus and JCDecaux, the world's second-largest outdoor advertiser,  invested  US$40 million in May last year.

Mr Zhuang, who is also Tulip's chief operating officer,  won a gold medal at the 1992 Olympics in swimming.

Shares of Nasdaq-listed Focus Media Holdings, the mainland's largest flat-screen advertiser, have risen 33 per cent this year. The Nasdaq Composite Index is up 8 per cent by comparison.

Focus Media places flat screens in mainland office buildings and retail stores.

The mainland's flat-screen advertisers attracted an estimated US$359.2 million of  advertising last year, against  the US$240 million garnered by all the magazines in the country combined, according to a report by Deutsche Bank.

The market for flat-screen advertising might more than double to US$771 million by next year,  it said.

Airmedia Advertising planned to raise about US$200 million from an initial public offering in the third quarter in Hong Kong or New York,  sources said earlier this year.

Airmedia sells space to advertisers on flat-screen televisions  in 52 mainland airports and on eight domestic airlines, including Air China, China Eastern Airlines, China Southern Airlines and Shanghai Airlines.

Digital Media Group, which sells flat-screen space in the mainland's railways, also planned to raise US$150 million on the Nasdaq next year, chief executive James Lim said.

Virtual success

LED screens are an effective advertising medium at traffic hubs

Estimated size of the mainland's flat-screen advertising market by next year, in US$$771m



Tulip looks to New York for US$200m IPO