Chinese podcasting platform Ximalaya has suspended plans for a Hong Kong itemizing after its try to lift as much as $100mn was rebuffed by traders, who stay cautious after Beijing launched a crackdown on overseas listings by homegrown teams over knowledge safety considerations.
Despite aiming for a sharply downsized fundraising goal of between $50mn and $100mn, the Spotify-like platform — which is backed by Chinese tech teams Tencent, Xiaomi and Baidu, in addition to Sony Music Entertainment — was undersubscribed, prompting it to carry off on continuing with its preliminary public providing based on bankers and early stage traders.
Shanghai-based Ximalaya’s expertise is a contemporary instance of how the trail to going public stays bumpy for data-rich Chinese companies seeking to faucet new traders in Hong Kong and New York, as US authorities step up calls for over audit disclosures and Chinese officers try to reel in abroad listings on cyber safety considerations.
“The sentiment was so poor at this point that even Ximalaya failed to get enough investors on board,” mentioned a Hong Kong-based IPO banker, including that the Spotify-like service, valued at Rmb27bn ($4.02bn) in its final funding spherical, was comparatively favoured amongst its friends.
Ximalaya had initially shelved a plan to checklist within the US after China’s high web watchdog, the Cyberspace Administration of China (CAC) urged holding off, based on a state-run investor within the firm. That deal reportedly aimed to lift round $500mn.
The investor added the corporate had obtained the blessing of each the CAC and China’s securities regulator for a Hong Kong IPO, regardless that knowledge safety guidelines for a brand new offshore listings regime are but to be finalised.
The firm’s newest setback comes throughout a dire yr for share gross sales in Hong Kong. New listings within the metropolis have raised simply $2.4bn within the yr to this point, based on knowledge from Dealogic, reflecting a 94 per cent fall in comparison with the identical interval a yr in the past.
The excessive finish of Ximalaya’s fundraising goal, whereas modest by historic requirements, was nonetheless properly above the norm for 2022. The 19 corporations delivered to market in Hong Kong this yr have raised simply $94mn on common.
A distinct, early stage investor in Ximalaya mentioned the corporate’s revived share sale had been pushed ahead regardless of “substandard market conditions” partly because of exit demand from among the firm’s personal fairness backers. Ximalaya can also be below strain to not value shares decrease than the extent at which state backers purchased in, they added.
It has been reported that the corporate is in discussions with a Shanghai authorities physique which may take a particular administration stake, generally known as “golden shares”. Such shares, which give authorities our bodies with veto energy over key selections together with going public, is considered one of many new practices regulators have established in recent times to inject better affect of personal corporations that course of a considerable amount of key knowledge.
Another of the handful of Chinese corporations searching for to check world investor urge for food is Noah Holdings, a Sequoia-backed supplier of personal wealth administration merchandise. The agency is holding reverse roadshow conferences this week for a deliberate Hong Kong itemizing, based on an individual accustomed to the matter.
Ximalaya, CAC and the China Securities Regulatory Commission didn’t instantly reply to requests for remark.
