IPO update

The second-largest music streaming service company in China cancelled its US$1 billion initial public offering in Hong Kong because of concerns that regulators will increasingly crack down on Chinese technology conglomerates, damaging investor confidence.

According to three people familiar with the matter, due to the disappointing response of investors, technology group NetEase’s music streaming business Yuncun will not conduct the initial public offering originally scheduled to start this week. One of the people familiar with the matter said that the company intends to wait for better market conditions to possibly restart its listing plan.

This IPO will be one of the largest stock offerings in Hong Kong this year and the first large-scale stock offering of a Chinese technology company since the listing in Beijing. Cracking down on overseas listings last month.

Chinese regulators have issued tough new regulations US IPO of ride-hailing company Didi Chuxing In June, Chinese technology and Internet conglomerates triggered a sharp sell-off. All planned initial public offerings of mainland Chinese companies in the United States have been shelved.

Wall Street Bankers have started Redirect billions of dollars After the China Science and Technology Group effectively freezes the US listing, it plans to go public from New York to Hong Kong.

However, the lack of investor interest in Yuncun’s IPO may indicate that the deepening tension between Washington and Beijing may not bring windfalls to Hong Kong, which has long tried to remove Chinese technology companies from Nasdaq and New York Securities. The exchange attracted.

According to Dealogic’s data, Chinese technology companies plan to raise at least US$9 billion by listing in Hong Kong this year.

“Now we have an IPO withdrawal, and I don’t think it’s over yet,” said Dickie Wong, head of research at brokerage Kingston Securities. Wong said that he expects more Chinese technology groups to postpone or cancel their listing plans in the coming months.

“Listing Chinese technology companies is no longer an easy task, whether in Hong Kong [or elsewhere], Due to regulatory risks,” he added.

TikTok’s Chinese parent company ByteDance is preparing to list in Hong Kong early next year. Financial Times report. Its listing plan has been plagued by delays. Earlier this year, after Chinese regulators issued data security warnings, it stopped preparations for a possible listing in New York or Hong Kong.

A Hong Kong fund manager said that Yuncun’s transaction last week appeared to be “difficult.” The fund manager said that bankers “asked us what price we were willing to accept instead of begging for distribution.”

A banker close to the deal said that some cornerstone investors in Yuncun would not agree to lock up their shares-which would prevent them from selling in the months following the IPO.

Discussions with investors and shares of Kuaishou, a short video application listed in Hong Kong, were conducted simultaneously A record drop of 15% Last week, after the post-IPO lock-up period expired, cornerstone supporters were able to sell.

Although antitrust regulators dealt a huge blow to rival Tencent last month, and bankers had expected this to boost the former’s valuation, Yuncun’s final moments took a big turn. On June 24, China’s State Administration for Market Regulation ordered Tencent Music to give up its music brand exclusive rights within 30 days.

However, as Beijing hinted that it would sell Chinese technology stocks last week, NetEase was in trouble. Fight online gamesSince the news broke last Tuesday, the share price of NetEase, China’s second largest gaming group, has fallen by about 11%.

A person familiar with Yuncun’s IPO plan said that the company “is closely monitoring market conditions and looking for the best window for listing”. NetEase did not immediately respond to a request for comment.

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