Foreign media: China's many scientific and technological "unicorns" or will focus on IPO in one year

[Foreign Media: China's Multiple Technology "Unicorns" Will Concentrate on One Year's IPO] According to foreign media reports, people familiar with the matter said that many Chinese technology companies have accelerated plans for financing in the global capital market and hope to use investment. The current optimism gained higher stock valuations.

Reported that in recent months, at least a dozen Chinese companies have been negotiating with bankers and potential investors about the IPO (initial public offering) issues. The total valuation of these Chinese companies is about 500 billion U.S. dollars, and they plan to go public in the second half of this year or early next year.

Analysts said that if all these transactions can proceed smoothly, at least $50 billion worth of new shares will enter the stock market, which will test investor interest in China's expanding Internet consumer economy.

This is in stark contrast to last year's situation. At that time, many of the world’s most valuable “unicorn” technology companies were not very interested in the capital market because they still had a lot of cash in hand, and private equity was also their financing option.

This time, there was a clear shift in attitude, which also benefited from a number of factors, including the relaxation of listing requirements in Mainland China and Hong Kong, the intensification of competition in China Mobile and the Internet industry, the rise in stock valuations, and pressure from shareholders. .

A partner at King & Wood Mallesons, a law firm that provides consulting services to Chinese technology companies, said: “This is a herd mentality. If one of your competitors decides to go public, you must also consider related issues.”

Some foreign media reported last week that due to the fierce competition in China and the global taxi application market, Didi Trip has been in touch with bankers in recent weeks to discuss the feasibility of IPO in the second half of this year. One of the people familiar with the matter said that Didi expects the IPO valuation to reach at least 70 billion to 80 billion US dollars.

Informed sources said that the reason why Didi travel accelerated the IPO process, to a certain extent, is because of the new local rival US Mission comments, which plans to conduct IPO later this year. The American Mission Review is an online platform that mainly provides takeout services. However, in March this year, it launched a taxi service on the market and went directly to the declaring war. Informed sources said that the US group's commentary on the IPO is expected to be valued at approximately US$60 billion, and may be listed in Mainland China and Hong Kong.

According to a partner of DLA Piper Law Firm in Hong Kong, following the merger with competitors or the acquisition of other technology companies, several private equity companies in the Mainland have become the industry’s leading competitors. The next listing is a natural choice.

In addition, several other Chinese technology unicorn companies that are considering IPO issues include smart phone maker Xiaomi, music streaming service company Tencent Music, online investment banking platform Lu Jinsuo, and Alibaba's financial services division Ant Financial Services etc. .

Among them, several companies plan to list in Hong Kong, which also benefits from the recent adjustment of the Hong Kong Stock Exchange listing rules. The new regulations will allow innovative companies to take the "dual equity structure" listing. At the same time, biotech companies that are not yet profitable or have no income are allowed to list in Hong Kong.

At the same time, the Mainland has recently allowed overseas listed companies to issue Chinese Depositary Receipts (CDRs) in the Mainland to attract the interest of domestic investors.

In addition, some young and relatively small companies are also developing IPO plans. For example, a number of people familiar with the matter stated that the news app headlines are scheduled to go public in the United States later this year. One of the sources said that the headline IPO valuation is expected to reach 4 billion US dollars.

In addition, the electric vehicle startup "Weilai Motors" also plans to raise funds from 2 billion U.S. dollars to 3 billion U.S. dollars on the New York Stock Exchange in the second half of this year. Informed sources also said that Softbank may purchase 200 million U.S. dollars worth of shares during the Weilai car IPO.

While Chinese technology companies are planning IPOs, U.S. investment banks are also eager to win the underwriting mission. Informed sources said that in recent months, several U.S. investment banks have invested a lot of time in the Chinese market to discuss IPO issues with these potential IPO companies. At the same time, several investment banks in Hong Kong are also expanding the team of technology bankers.

A senior manager of Huaxing Capital stated that some companies consider IPO issues and some investors consider buying these shares. For this reason, the workload of their team has suddenly increased and it is already busy.

At present, many Chinese Internet companies are expanding their scale and are actively expanding their international markets. In order to support business growth and mergers and acquisitions and to resist domestic and foreign competitors, they need more funds as a guarantee. After several rounds of large-scale private equity financing, in addition to IPO, their financing options have been limited.

At the same time, the early investors of these companies also urged the company to do the morning market as the stock market is still in a period of high growth. Recently, although global technology stocks have been in decline, the share prices of Tencent and Alibaba have increased by more than 50% year-on-year.

Analysts said that if this 50 billion U.S. dollars of new shares enter the stock market, this will test investors’ interest in China’s expanding Internet consumer economy. Whether global capital markets can absorb these sudden new stocks remains to be seen.

A person in charge of CLSA Greater China equity capital market said: "The recent technology IPOs are mostly institutional investors, reflecting the maturity and development of the market."

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