Blame Them Damn Bankers for Your Train-Wreck IPO

(Bloomberg Opinion) -- Damn those Wall Street types. Those greedy bankers. Incompetent imbeciles who messed up your dreams of NYSE glory.

They’re to blame for M17 Entertainment Ltd. – your streaming content/online-dating company – failing to turn a profit and showing no signs it will move into the black anytime soon.

To hell with them, and the fact that 48 percent of your revenue comes from just 500 whales, while 71 percent of the spending went on only 500 content streamers.

How dare they sell you on a fantasy valuation and promises that they can spin a tale so enticing that investors around the world will flock to a ticker code that’s almost impossible to explain. Seriously, “YQ,” what does that even mean?

What fools they must be, unable to explain to prospective investors which of their funds should hold stock in a developing-market company that gets 93 percent of its revenue from Taiwan and Japan, but has minuscule exposure to the huge and fast-growing consumer sector in China.

It’s entirely the bankers’ fault that your shares suffer from a problem of product-market fit, meaning no investor really knows how to value them, in which category they belong, or who in the future may even want to make a takeover bid for the company.

And they certainly should have warned you away from a U.S. listing, or any listing, and advised you to find a strategic exit, saving you the time and money of quarterly reporting requirements and onerous compliance. Because they, like you, know that being bought out for a handy sum just isn’t as sexy as ringing the bell at the New York Stock Exchange.

Let’s also finger the bankers for your over-the-top dual-class structure, which gives unlisted Class A shares (60 percent of which are held by one person) an absurd 20:1 voting-rights premium over listed Class B.

Explain your delayed listing as being due to “issues related to the settlement of American depositary shares with certain IPO investors,” while declining to explain that in plain English. It could have been that friends and family, friendly investors, connections and contacts were all lined up to buy into your IPO, but maybe the bankers are the reason they couldn’t get their money into a New York bank account in time – you know, it being a New York listing and all. Who knows? Several attempts to get comments from M17 spokespeople were unsucccessful.

And absolutely blame Deutsche Bank AG and Citigroup Inc. for not putting their A-team on your small-cap listing while there’s a wave of far more lucrative red-hot technology IPOs taking place elsewhere.

Yup, go ahead. Drop F-bombs on social media and blame the bankers. That’s what they’re paid for.

©2018 Bloomberg L.P.

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