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Liquidity Pursuit

A long list of private equity-backed companies are planning IPOs that will further define Asian private equity's 2004 performance, says the Asia Private Equity Review.

In the first half of the year, divestments that engaged 66 Asian private equity firms were recorded. As the year enters the fourth quarter, at least seven companies backed by private equity capital are seeking public offerings, making 2004 truly a year of exits for private equity investors. 51job, one of the largest online recruitment services in China, is a forerunner in charging the initial public offering trail.

After having postponed its listing plan in late June, it became the latest China-based technology company that was listed on NASDAQ. Backed by Doll Capital Management in May 2000, 51job received US$8 million from the Silicon Valley-based venture capital firm. On its debut, 51job's share price closed 51% higher than its offered price, at US$21.15, making its goal to raise US$60 million not such a tall order after all. The real test of investors' appetite for China stocks, especially telecommunications plays, will be the forthcoming public offering of China Netcom.

The second largest telecommunications carrier in the country and the first to enlist foreign investors, China Netcom has been fortifying its assets to ensure its public offering would not be a repeated phenomenon as that of China Telecom's. In October 2002, China's largest telecommunications carrier went public on the Hong Kong Stock Exchange, but the debut had to be relaunched due to a lack of overwhelming response from global institutions.

After a lengthy period of preparation and much publicity, China Netcom is aiming for a dual listing in October on the Hong Kong and New York stock exchanges. Backed by Goldman Sachs and News Corp., China Netcom has scaled back its offering size by 30%, from the original US$1.5 billion to US$1 billion. It is the first indication of China Netcom's assessment of market sentiment.

For Techfaith Wireless Communication Technology, the NASDAQ holds the magic, especially in light of 51job's recent debut. The Beijing-based handset design house has abandoned its early plan to go public on the Hong Kong Stock Exchange. In April this year, Techfaith Wireless Communication received US$14 million from Intel Capital, Qualcomm and other investors.

Malaysia will board the IPO train with the expected listings of both AirAsia and JobStreet.com - events of great interest and immeasurable importance to Asian private equity.

AirAsia is a budget airline that in June of last year received US$26 million from a consortium of private equity investors based outside of Asia, including IDB Infrastructure Fund, Crescent Capital Partners and Deucalion Capital. The three-year old low-cost carrier is known to be preparing for its public offering issue as a fierce price war is taking place in Southeast Asia.

This public fund raising exercise is crucial to AirAsia's future as it requires additional resources to compete against other discount airlines that have mushroomed in the region. AirAsia is expected to be listed on the Kuala Lumpur Stock Exchange and is hoping to raise RM700 million (US$183.6 million).

JobStreet.com, meanwhile, has chosen the MESDAQ, the second board of the Kuala Lumpur Stock Exchange, as its listing platform. Established in 1995, JobStreet.com received a total of RM12 million (US$3.2 million) from a consortium of investors with Walden International providing seed funding, and Intelligent Capital and Sumitomo Corp. making later-stage commitments.

Amidst positive sentiment toward the initial public offering market, Singapore could soon be welcoming the second Indian company to its stock exchange. Mphasis BFL Ltd., one of the largest information technology companies in India, is considering a public listing on the Singapore Exchange Ltd. ('SGX').

Backed by Baring India Investments Ltd which currently holds a 35.41% equity position in the company, Mphasis BFL will be the second Indian company to list on the SGX, after Meghmani Organics Ltd which was listed in August. Interestingly, the specialty chemicals and pigment manufacturer was also backed by two private equity investors, ASC Capital and Electra Partners, with an investment history that dates back to 1996.

However, Meghmani Organics' debut failed to draw an overwhelming response from investors.

Asia Private Equity Review (APER) is the foremost voice on matters related to private equity/venture capital in the region. Well-recognised as being the singular source for accurate and timely news, in-depth analysis and global perspectives, APER is published by the Hong Kong-based Centre for Asia Private Equity Research. For further information please visit our website at www.asiape.comor email us at info@asiape.com