Longmaster Information & Technology Co Ltd, a Chinese developer of online chat and telephony applications, has been forced to halt its planned initial public share offer because it failed to attract enough institutional subscribers, two sources said on Wednesday.
Longmaster is the second company in the 20-year history of the Chinese stock market to have to scrap an IPO after its formal launch, due to a failure to attract bids from the required 20 institutions during book-building.
Longmaster, based in the southern province of Guizhou, received bids from only 18 institutional investors, said the sources with direct knowledge of the deal, by definition forcing it to suspend its IPO.
It was attempting to list on the Nasdaq-style ChiNext enterprise board in the southern boomtown of Shenzhen, meant as place for high-tech companies to raise funds. It will have the option of relaunching its IPO within six months.
China's stock markets have come under increasing scrutiny in past years, with what many consider unreasonably high valuations on IPOs, especially on the ChiNext market, drawing complaints from some institutional investors.
At the end of last year, Societe Generale's Chinese fund venture took the rare step of announcing that it would refrain from participating in IPOs in China, due to the high valuations and sluggish stock market, which fell by 22 percent last year.
Longmaster was aiming to raise money to fund projects worth at least 237 million yuan ($37.5 million), and received approval for its listing from the China Securities Regulatory Commission in October.
In June last year, Nanning Baling Technology Co became the first Chinese company to scrap an IPO after the formal launch after failing to draw sufficient interest from institutional investors.
Baling eventually did succeed in its IPO on a second attempt, listing in the Shenzhen market in November. Hongyuan Securities is the underwriter of the Longmaster IPO.
Comments
Comments are closed.