Private equity firms are looking to generate more exits for Chinese investments on U.S. exchanges in the coming months, judging by the recent filing of new offerings by China-based companies.
In the last month, four Chinese companies have filed to sell shares on the Nasdaq, seeking to raise $486 million from their combined offerings.
U.S. venture investors are poised to capitalize nicely on a few of those deals. CGEN Digital Media, which operates in-store television advertising networks, has one of the largest planned offerings. It’s hoping to raise up to $137 million in an offering of American Depository Shares (ADRs). TDF Capital, Redpoint Ventures, JAFCO Asia and CPI Ballpark Investments invested nearly $28 million in the Shanghai-based company, according to Thomson Financial (publisher of PE Week).
Outsourcing service provider VanceInfo Technologies, which filed to go public Nov. 23, may also deliver a big return. Investors, including Sequoia Capital, DCM, Inno Global Technology, Button Software and Harper Capital, collectively own more than 80% of shares in the company, which is looking to raise up to $73 million in a 7.7 million share offering. The company is based in the Cayman Islands with executive offices in Beijing.
Then there is ChinaEdu Corp., an online education provider. The Beijing-based company, which received $28 million in venture funding between 2004 and 2007, is planning to raise up to $94 million through a 6.8 million share offering. Tiger Global is the largest private equity backer, owning more than 10 million shares, or 20% of the company. Other investors include McGraw-Hill, Level Global Investors, Right Union Investment and IDG Technology Venture Investments.
Shenzhen-based VisionChina Media, which operates digital television displays on buses, is planning an ADR offering that could raise up to $155 million. U.S. private equity backers include Milestone Venture Partners and Goldman Sachs.
The flurry of planned offerings comes on the heels of an active third quarter for market debuts. In all, 29 venture- and private equity-backed Chinese companies began selling shares on overseas and domestic markets in the previous three months, raising $1.8 billion, according to Zero2IPO, a Hong Kong-based firm that tracks China’s venture and private equity sector.
In the same period a year ago, the research firm reported that only 10 China-based companies debuted on overseas exchanges.
Looking ahead, Zero2IPO predicts that the fourth quarter will likely set a record for IPOs on China’s domestic markets, and that demand for overseas offerings will be smaller.