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Pinduoduo and two other Chinese tech stocks to land in U.S. today
When the sun shines on the land of United States for a new day, the country’s stock exchanges will welcome three Chinese companies celebrating their IPOs: data solution firm Aurora Mobile Limited (NASDAQ: JG), price-for-value social retail platform Pingduoduo (NASDAQ: PDD), and Cango (NYSE: CANG), fintech solution provider for the car industry.
Aurora released its IPO details earlier today, confirming the offering of 9,060,000 American Depositary Shares (ADS) at $8.5 per share for a total size of $77 million. Aurora’s clients include Baidu, Tencent, Didi, and Bilibili.
Pinduoduo, boosted by 20-fold oversubscription and high market valuation, confirmed today to set the IPO price at $19 per ADS. The price hits the top of expected IPO price range, and will allow Pinduoduo to raise around $1.6 billion. The very positive feedback from Pinduoduo’s pre-IPO could have allowed it to raise the IPO price to $22.8 per ADS.
Meanwhile, Cango, originally planned to offer 12.5 million ADSs at a price range of $10-$12, decided to cut the offering to 4 million ADSs about 24 hours before the scheduled IPO time. The change is going to bring down around 68% financing Cango could have raised if the previous file plan was successful. Cango now expects to raise $44 million. The company’s investor before IPO include Tencent and Didi.
What is interesting is not Chinese firms’ aggressive moves in global capital markets. Considering the common billion-size financing in China’s tech industry, Cango’s $44 million expectation is not a mission impossible in China. Meanwhile, China’s state government released clear signal to encourage Chinese tech and fintech companies to file for IPO in mainland either by issuing regular stock shares or China Depositary Receipt (CDR).
However, domestic liquidity problems and both individual and institutional investors’ shortage of money are shattering companies’ IPO and fundraising confidence.
According to a phone conversation record an individual stock investor kept, during his conversation with a staff from China Securities Regulatory Commission, the investor said introducing a bunch of heavy-capital stocks that can easily fluctuate stock indices will be too much for ordinary investors.
Meanwhile, he said, “There is not much money in the stock market. I wonder how companies will get sufficient funding, particularly when you introduce many new stocks at a time.”
The record went viral but was deleted soon. A manuscript (in Chinese) is available on China’s leading investment information platform Xueqiu.
For institutional investors, higher valuation and flexible operation options outside mainland China are more attractive, and more convenient for early investors to exit and profit.
By 24:00 July 27 EST, 19 Chinese companies will have been listed in the U.S. in 2018. Meanwhile, the Chinese finance market believes the state central bank is going to loose monetary policy and lower deposit reserve ratio to encourage capital supply and market liquidity.