Chinese Online Social Network Sina Weibo Files for US IPO
China’s Weibo Corp filed for initial public offering in the US last Friday, March 14. The company, which is a unit of Chinese major firm Sina Corp, has become the latest Internet giant from China to try tapping the US markets for funds. It followed Baidu and Alibaba, which recently listed in the US market. It aims to generate up to $500 million from its listing.
It should be noted how many Chinese companies now seem to be flocking to the US market obviously to take advantage of usually soaring valuations. Logically, those firms have been inspired by the IPO success of Alibaba, which is poised to generate up to $15 billion in the US this year to be the highest profile IPO of an online firm since Facebook’s successful listing in 2012.
Chinese firms flocking to US
Interestingly, Weibo seems very open about the real situation as it aims to persuade investors into its IPO. On Friday, the company warned investors and potential investors about the level of uncertainty that is still arising from strict regulations of the Chinese government. It has been honest enough to admit that those actions by Beijing could bear significant impact to its business.
Weibo particularly underlined the Chinese regulation that was implemented since September. Under that policy, online users in the mainland could face up to three years of prison term in China if they are proven to intentionally post data that could be considered as false or defamatory against the Chinese government.
The company was also honest enough to warn investors about the possibility that Beijing could intervene in its encryption tools as well as software. The measure is seen as a strategy against spying. It could also possibly safeguard privacy of users as well as their posts.
Despite those, it is interesting how many US investors still show interest in investing in such Chinese firms. Logically, most of them want to take a share in the further rise of China, which is currently considered as among the fastest growing major economies in the world.
It is expected that more Chinese firms would file for IPOs in the US this year. Many of those companies have been listing in the US market since 2010. Ironically, in the past few years, many skeptics were concerned about how they perceive Chinese accounting standards to be heavily flawed. They pointed out the few high-profile audit scandals that were discovered.