JD.com, China’s largest online direct sales company, set pricing terms late Friday afternoon for its IPO, looking to raise as much as $1.6 billion. That would give the company a market value of almost $25 billion. JD.com jumped onto next week’s calendar.
Here’s the story behind the buzz: The Chinese aren’t coming. They’ve arrived.
All Aboard the IPO Orient Express
Guangshen Railway (GSH) was the first IPO from The Peoples’ Republic of China to make its debut in the U.S. capital markets. On May 12, 1996, Guangshen priced its IPO at $19 per share and it closed its opening day at $20.25. Since then, its stock has been on a roller coaster riding from a low of $4.25 on Aug. 11, 1998, to a high of $45.59 on Sept. 28, 2007. Guangshen closed at $18.56 on Friday, May 9, 2014.
Since that beginning in May 1996, about 176 China/Hong Kong-based companies have populated the U.S. IPO calendar.
In 1997, four more IPOs from China/Hong Kong came to market. In 1998, another four were priced and another four in 1999.
On Oct. 16, 2007, the Shanghai Index hit its all-time closing high of 6,092.06. On May 9, 2014, the Shanghai Index ended at 2,011.13, DOWN 67 percent from its record high. A total of 31 IPOs from China/Hong Kong made their debuts on Wall Street in 2007. The traffic tapered off in the next two years and jumped to 39 IPOs in 2010. Eight came to market in 2013.
This year’s U.S. IPO calendar has produced seven from China/Hong Kong. Their 2014 report card doesn’t exactly get a gold star, but the underlying stock market indexes don’t either. Five of the seven closed on Friday, May 9, as winners. The average gain for all seven was 2.61 percent from their initial offering prices. Still, that’s much better than the stock market.
The NASDAQ Composite Index closed on Friday at 4,071.87, DOWN 2.51 percent for the year. The Shanghai Index closed at 2,011.13, DOWN 4.96 percent for the year. Hong Kong’s Hang Seng Index closed at 21,862.99, DOWN 6.19 percent for the year.
Now bring on Alibaba.
Beauty and Beijing
This brings us to this week, with seven deals billed as IPOs. Jumei, a Chinese online retailer of beauty products, is one of the names on this week’s IPO calendar. Goldman Sachs and Sandler O’Neill are the lead or joint-lead managers of three IPOs each. The calendar is expected to raise about $600 million.
From Goldman Sachs
· Jumei International Holding (JMEI – proposed) is a Beijing-based online retailer of beauty products in China. The company reports it has about 10.5 million customers. An estimated 1,700 suppliers and third-party merchants offer products to Jumei’s customers. For more information, please click here: Jumei International Holding Ltd)
· TrueCar(TRUE – proposed) is a Santa Monica, California-based website enabling users to obtain market-based pricing data on new and used cars, and to connect with the company’s network of TrueCar Certified Dealers.(For more information, please click here: TrueCar)
· Zendesk (ZEN – proposed) is a San Francisco-based software development company that provides a SaaS customer service platform. The company’s platform provides ticketing, self-service options and customer support features to about 40,000 customers who are located in 140 countries.(For more information, please click here: Zendesk)
From Sandler O’Neill
· Bankwell Financial Group (BWFG) is a New Canaan, Connecticut-based bank holding company offering a broad range of financial services through its banking subsidiary, Bankwell Bank. (Note: Its preliminary prospectus states: “Prior to this offering, there has been no established public market for our common stock.” However, the OTC BB showed 200 shares traded at $22 each on May 7, 2014, and a spotty trading history back to April 28, 2010.) For more information, please click here: Bankwell Financial Group)
· ETRE REIT (ECAV – proposed) is a New York City-based REIT created to let people who acquire shares in this offering to own 1201 Connecticut Avenue NW, an office building located in the “Golden Triangle” in Washington, D.C. (For more information, please click here: ETRE REIT)
· ServisFirst Bancshares (SFBS – proposed) is a Birmingham, Alabama-based bank holding company providing commercial banking services through 12 full-service banking offices located in Alabama, the panhandle of Florida and a loan production office in Nashville, Tennessee. (Note: Its proposed offering price is $91 to $93 share.) (For more information, please click here: ServisFirst Bancshares)
Looking into the following week, the calendar has three IPOs. One is – yes – out of China. The three deals are expected to raise about $1.9 billion. As we have seen in the past, more names could pop onto the IPO launching pad by the time that Monday, May 19, rolls around.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.