Chinese Firms Are Leaving the U.S. to Relit Back Home
Chinese companies are pulling out of the U.S. stock market at a record pace.
Twelve Chinese firms traded in the U.S. have received bids this year totaling $10.6 billion to delist their shares, according to data compiled by Bloomberg. Renren Inc., the $2.2 billion social-networking site, and 21Vianet Group Inc., a Beijing-based operator of data centers, on Wednesday became the latest companies to say they received offers to go private.
Chinese firms are leaving the U.S. to relist back home, where share gains are the biggest worldwide and scrutiny of their business is likely to be less, according to Pacific Crest Securities LLC. Focus Media Holding Ltd., the Chinese advertising company taken private in New York in 2013 after pressure from short-seller Carson Block, said June 3 it planned to list in Shenzhen through a reverse merger.
“You’ve seen companies that feel they’re unloved, or those that have confidence they’ll get higher valuations in China, looking for going private and relisting in the domestic market,” Cheng Cheng, an analyst at Pacific Crest Securities, said by phone Wednesday.
Just three Chinese companies have conducted initial public offerings in the U.S. this year, raising a total of $163 million. Fifteen companies led by Alibaba Group Holding Ltd. raised $29.5 billion through U.S. listings in 2014, the most on record.
The Bloomberg China-US Equity index has gained 32 percent in the past 12 months, trailing the Shanghai Composite Index’s 149 percent advance in the biggest underperformance in five years. The size of the take-private bids this year have topped the previous record of $8.1 billion in 2012, when 19 companies delisted after regulatory scrutiny into the use of reverse takeovers.
The Shanghai benchmark index rose 0.3 percent at the close Thursday. The Bloomberg index of the most-traded Chinese companies in the U.S. gained 1.3 percent at 3:18 p.m. in New York.
Takeover Offer
More companies are likely to follow suit, according to Credit Suisse Group AG. New Oriental Education & Technology Group Inc., the $4 billion tutoring firm, and Shanghai-based recruitment website 51job Inc. are among the top candidates to receive take-private offers based on factors including valuation and free float, the brokerage said in a note Wednesday.
Renren received an $976 million offer from two of its executives, while 21Vianet got a $1.4 billion takeover bid from its chief executive officer, software maker Kingsoft Corp. and an arm of China’s elite Tsinghua University.
