Sina Weibo, China's version of Twitter, set to make its debut on Wall Street
April 16, 2014, 12:04 am TWN
BEIJING--Sina Weibo, widely known as China's version of Twitter, is set to go public in the United States this week — after three weeks of sell-offs took their toll on technology stocks.
The microblogging subsidiary of Chinese Internet behemoth Sina is scheduled to debut on the Nasdaq exchange on Thursday under the symbol “WB” in an initial public offering (IPO) expected to raise at least US$340 million.
Sina Weibo — launched in August 2009 to provide services akin to Twitter, which is banned in China — is a leading social media site in a country with the world's largest population of Internet users at 618 million.
But the estimated value of the IPO, filed by Weibo with the U.S. Securities and Exchange Commission this month, was down on the sum of up to US$500 million indicated in March — reflecting discretion amid a gloomy market outlook after the Nasdaq index was down for more than three weeks.
The service itself is also facing questions about the size of its user base and rising competition from local rivals, such as Tencent's mobile app WeChat.
“It's much riskier for them to enter the market now than it was three weeks ago,” Gregori Volokhine, a trader for Meeschaert Financial Services, told AFP.
A total of 16 IPOs in Wall Street were planned for last week, the most in more than seven years, according to consulting firm Renaissance Capital.
But it said only 10 were completed as the market downturn continued, with six ending the week below their issue price due to a selloff in tech stocks as the Nasdaq suffered its biggest one-day fall since 2011.
Weibo set its price per share in a range of US$17-19, relatively cheap compared with other social networking companies.
The IPO is for 20 million shares, with an option for three million more if there is enough demand.
A unit of Chinese e-commerce giant Alibaba had agreed to buy three million shares in the listing, with an option to increase its stake to up to 30 percent of the total capital of the company, up from its current 18 percent.
Funds from Alibaba will be used to repay loans from Sina, which would still hold 56.9 percent of the capital after the IPO, down from 79.9 percent.
Weibo's filing with U.S. authorities omits some financial information usually included because it is an “emerging growth company” with more lenient reporting requirements for companies with less than US$1 billion in revenues.
But Volokhine said that on Wall Street, there is generally “a discount on Chinese companies listed there, because they don't disclose their earnings and financial figures in a very transparent way.”