Carlyle-backed Focus Media plans $1 bln Hong Kong IPO in early 2015

No banks have been formally mandated for the IPO. The deal would come less than one year after Focus Media delisted from the Nasdaq stock market.

Carlyle, FountainVest Partners, CITIC Capital Partners, China Everbright and Fosun International Ltd acquired Focus Media in May 2013 for $3.8 billion, in what was China’s biggest-ever leveraged buyout.

A growing number of Chinese technology and Internet companies are looking to list in Hong Kong. Some are impressed by the recent performance of the sector there, believing they can command just as high a valuation in Hong Kong as in the US. Others are wary of the US market after a series of accounting scandals hit stock prices in 2010 and 2011.

“The cost of Chinese companies listing in the US is high, not in terms of money but the regulatory burden and the potential allegations,” said a banker focused on the technology and media sector. “The recent decision by the US to suspend the Chinese affiliates of the Big Four accounting firms from auditing US-traded clients for six months is another example.”

Focus Media’s planned Hong Kong IPO could provide a template for many other US-listed Chinese companies that have seen their share prices come under increased pressure.

Focus Media, a display advertising company with screens in lift lobbies, buses and supermarkets across China, was among those hardest hit by growing fears over US-listed Chinese companies. Its shares plunged in November 2011 following a report from short-seller Muddy Waters, which alleged that the company had overstated the number of screens it used to display advertisements, and accused it of overpaying for acquisitions. Focus Media has denied those claims.

Fiona Lau is a senior reporter for IFR in Hong Kong