Chinese Companies Lead the 2020 US IPO Market
COVID-19 and China
Sign showing the direction to the emblematic New York street, Wall Street . Image Credit: Rick Tap/Unsplash

On June 16, 2020, Shanghai-based biotech company I-Mab Biopharma (天境生物) become the third Chinese company to launch an initial public offering in the US Stock market this year. 

Listed on Nasdaq under the ticker 'IMAB,' the firm is the first Chinese biotech company to do so in around two years, as most of the companies from the mainland have forayed into the Hong Kong Stock Exchange. I-Mab raised USD 104 million by offering 7.4 million American Depository Shares (ADS) priced at USD 14, within the range of USD 12 to 15. 

The company stock opened slightly lower than the offer price at USD 14.75, reaching the lowest price at USD 12.32; by the end of the day, the stock closed at USD 12.52 with a market value of USD 909 million

The offering was comprised of four underwriters, including New York-based management firm Jefferies and Beijing-based investment bank China International Capital Corporation (中金公司) acting as joint book-running managers, while investment bank China Renaissance (华兴资本) and financial services provider Huatai Securities (USA) served as lead managers.

A new amendment onto the company's IPO filing revealed that, before its initial public offering, the cancer drug developer issued over USD 300 million worth of shares to a plethora of venture capitalists and private equity arms of pharmaceutical behemoths, including Wuxi Apptec's (SH: 603259) venture capital arm and Ally Bridge Group. 

Alongside the drug developer, two other Chinese companies made their IPO debut on the US Stock Exchange. Beijing-based apartment rental platform Danke Apartment (蛋壳公寓), also known as 'Phoenix Tree Holdings,' raised USD 130 million by offering 9.6 million ADS at the offer price of USD 13.50, ranging between USD 14.50 to 16.50. The stock closed flat on Friday. Citigroup Global Markets, Credit Suisse, and JPMorgan and Tiger Brokers acted as underwriters for this IPO. However, Danke's IPO did not come easy as the company had a net loss of CNY 2.5 billion in the first nine months of 2019.

Claiming to be the largest interactive audio entertainment platform and the second-largest online audio platform in China, LIZHI (荔枝) snagged a comfortable amount of USD 45 million by offering 4.1 million ADS priced at USD 11, with the range landing between USD 11 to 13. However, Lizhi observed a net loss of CNY 104 million (equivalent to USD 14.55 million) in the first three quarters of 2019, nine times higher than the same period in 2018.

Besides Chinese companies' debut on the US stock market, the US-based mortgage lender Velocity Financial (VEL: NYSE) also made its debut on the New York Stock Exchange,  with an offer price of USD 13; the company raised USD 94 million at a USD 247 million market cap. 

Editor: Luke Sheehan

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