Chinese podcast group fails to launch $100m IPO in Hong Kong blow

Chinese podcasting platform Ximalaya has suspended Hong Kong listing plans after its bid to raise up to $100m was rebuffed by investors, who remain wary after Beijing launched a crackdown on registrations abroad by local groups for data security reasons.

Despite its sharply reduced fundraising target of between $50m and $100m, the Spotify-like platform – which is backed by Chinese tech groups Tencent, Xiaomi and Baidu, as well as Sony Music Entertainment – has been under -subscribed, which prompted her to wait. with its IPO according to bankers and early-stage investors.

The retirement of Shanghai-based Ximalaya was another indication of how the road to IPO remains bumpy for data-rich Chinese companies seeking to attract investors in Hong Kong and New York, as US authorities are stepping up their audit disclosure requirements and Chinese authorities are trying to catch up. registrations abroad due to cybersecurity concerns.

“Sentiment was so bad at this stage that even Ximalaya failed to attract enough investors,” a Hong Kong-based IPO banker said, adding that the audio service, valued at Rmb27 billion (4 billion dollars) in its last funding round, was previously relatively favored among its peers.

Ximalaya originally dropped plans to list in the United States after China’s top internet watchdog, the Cyberspace Administration of China, suggested suspending, according to a public investor in the company. This deal reportedly aimed to raise around $500 million.

The investor added that the company had received blessings from the CAC and China’s securities regulator for an IPO in Hong Kong, although data security rules for an offshore listing regime have yet to be finalized.

The company’s latest setback comes in a disastrous year for Hong Kong stock sales. New listings in the city have brought in just $2.4 billion year-to-date, according to Dealogic data, reflecting a 94% drop from the same period a year ago.

The high end of Ximalaya’s fundraising target, while modest by historical standards, was still well above the norm for 2022. The 19 companies introduced to the market in Hong Kong this year did not raised only $94 million on average.

Another early-stage investor in Ximalaya said the company’s relaunch of the stock sale had been pushed despite “substandard market conditions”, in part due to demand from some of its investors to exit. private funders. Ximalaya is also under pressure not to price the shares below the level at which state backers bought, the investor added.

It was reported that the company was in talks with a Shanghai government body that could take a special management stake, known as “preferred shares”. These actions, which give government agencies veto power over major decisions, including IPOs, are one of many new practices regulators have introduced in recent years to exert greater influence over private companies that process large amounts of data.

Noah Holdings, a Sequoia-backed provider of private wealth management products, is another of the few Chinese companies looking to test the appetite of global investors. The company is holding reverse tour meetings this week for a planned listing in Hong Kong, according to a person familiar with the matter.

Ximalaya, CAC and the China Securities Regulatory Commission did not immediately respond to requests for comment.

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