TMT companies lead charge of at least 10 Chinese firms going public on Nasdaq this year

Entrepreneurial spirit flourishing in China, says Nasdaq chief.

PUBLISHED : Sunday, 05 June, 2016, 7:12pm
UPDATED : Monday, 06 June, 2016, 5:21am

Unfazed by China’s lingering economic slowdown, the head of the Nasdaq sees a new wave of technology companies leading the charge of mainland firms going public this year in the world’s second-largest exchange by market capitalisation.

“I was in Beijing recently, and found the entrepreneurial spirit alive and well [in China],” Nasdaq chief executive Robert Greifeld told the South China Morning Post in an interview on Friday.

“The vast majority of those interested in listing in the US ... are from TMT (the technology-media-telecommunications sector), where there is a range of opportunities,” Greifeld said. “We have a decent shot of having at least 10 initial public offerings (IPOs) come to the US from China this year.”

Data from the New York-based Nasdaq showed that the average number of Chinese companies listing on the exchange has reached 11 annually over the past four years.

“It was certainly more of a boom time 10 years ago, but we’re at kind of a half-decade high right now,” Greifeld said.

Chinese biotech company BeiGene raised US$158 million on the Nasdaq in February in one of the first IPOs of this year.

Founded in Beijing, the company is developing what it has described as “the next generation of cancer treatment,” which includes novel “molecularly targeted and immuno-oncology therapeutics.”

Greifeld said a leading Chinese business-to-consumer e-commerce company, “which has had rapid growth in the past year,” as well as a firm involved in the dental business are among those pursuing a public listing on the Nasdaq.

“The [Chinese] companies that are attempting to get listed on the Nasdaq are not concerned, in general, about the macroeconomic climate,” he said. “They are more about delivering new products and services that could change the world. If they do what they’ve set out to accomplish, there will be demand.”

The other Chinese IPOs on the Nasdaq so far this year were health care-focused Hutchison China MediTech, which is controlled by Hong Kong-listed conglomerate CK Hutchison Holdings, in March and Shanghai-based online commodities broker Yintech Investment in April.

Those two newly-listed firms each raised US$101 million on the Nasdaq.

A strong pipeline of innovative new Chinese companies aiming to list on the Nasdaq and a better understanding by those firms of what that process entails has provided the exchange with “a right balance”, despite a series of delisting initiatives by mainland enterprises from the US.

“There were two phases of delistings,” Greifeld said. “One was the time when we had to delist a number of [Chinese companies] because they weren’t meeting the [reporting] requirements.”

The other phase recently involved what he described as a small number of companies that sought higher valuation by returning to China.

“Every year, we have certain public companies that get taken private, with Dell as the biggest to date [for the Nasdaq],” Greifeld said.

Computer giant Dell went private in October 2013 in a US$25-billion transaction led by its founder and chairman Michael Dell.

“Any time that people believe there is a valuation arbitrage opportunity, people will take action. It’s a fact of life in the markets,” Greifeld said.

Online travel services provider eLong last week completed a deal to go private and delist from the Nasdaq by its parent China E-dragon Holdings, which valued the firm at US$661.2 million.