Many Chinese companies listed in the U.S. have received proposals to go private, with others expecting to join, as China may proceed with the opening-up of its stock market.
Some of the latest companies to join the ranks of these Chinese companies include Renren Inc., once dubbed the Facebook of China, and 21Vianet Group Inc., a Beijing-based data center services provider.
On June 9, Wednesday, Renren's CEO Chen Yizhou and COO Liu Jian have proposed to the company a non-binding going-private transaction. The two executives have also expressed plans to buy all outstanding ordinary shares they do not hold for $4.2 per American depositary share (ADS).
Similarly, on the same day, Chen Sheng, 21Vianet's CEO, and two other Chinese tech companies (Kingsoft Corp. and Tsinghua Unigroup International Co.) offered a buyout of outstanding ordinary shares of 21Vianet for $23 per ADS.
Jiayuan.com International, an online dating platform, mobile Internet company Sungy Mobile, and tutor service provider Xueda Education Group have reportedly received proposals to go private earlier this year, while Chinese online game developer Shanda Games has agreed to go private for $1.9 billion in April.
According to the report, the Chinese tech companies opted to get listed in the U.S. because China has set a higher threshold, which included profitability requirement, on IPOs. Analysts said that the trend to go private came as China is now considering a registration-based IPO system, which is expected to lower the threshold.
Xiao Gang, chairman of China Securities Regulatory Commission, was quoted by media reports in March as saying that the Chinese government is ready to implement the registration-based IPO system within this year.
"Chinese companies can save lots of costs in coping with the stricter regulation and supervision in the U.S. by getting listed on China's A-share market," Dong Dengxin, director of the Financial Securities Institute of Wuhan University of Science and Technology, told the Global Times on June 11, Thursday.
Dong said that aside from getting lower supervision costs in China, these Chinese companies may also raise more money in China's bullish stock market.
"Now that the A-share market is performing strongly, Chinese tech companies can likely obtain a high evaluation for their offerings," Dong said.