China Tech Titan's Touch Is No Guarantee of U.S. IPO Riches
(Bloomberg) -- Investors are learning that the backing of Tencent Holdings Ltd., China’s largest social network operator, is no guarantee of IPO riches.
Stock buyers piled into the initial public offering of the Chinese technology titan’s e-book arm China Literature Ltd., hoping it would repeat Tencent’s 500-fold increase since its own listing. While they’ve been quickly rewarded since China Literature’s debut last week, with shares rising 79 percent to date in Hong Kong, some other Tencent-backed companies that recently went public in the U.S. are far from thriving.
Shares of Sogou Inc., China’s No. 3 search engine, closed below their offer price Wednesday after three straight days of declines. The company, whose biggest shareholder is Tencent, is now down 2.4 percent since its debut in New York last week. Sea Ltd., a Tencent-backed online gaming portal, has fallen 1.9 percent in U.S. trading since its October listing.
The latest Tencent investment to hit the market is online car-financing provider Yixin Group Ltd., which rose as much as 32 percent on its Hong Kong debut Thursday before paring its gains.
There’s more coming. Tencent’s Spotify-like music platform has asked for banks to pitch for a role on an IPO next year that could raise as much at least $1 billion, people with knowledge of the matter said earlier.
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