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@ visit http://www.ifre.comWanda flop sours
China-to-US IPOs
Equities Dalian Wanda Group company stumbles 36% on debutBY FIONA LAUThe dismal trading debut of WANDA
SPORTS GROUP is expected to add to
THEûCHALLENGESûOFûFUTUREû#HINA
TO
53û)0/S ûEVENûASûTRADEûTENSIONSû
escalate between the two countries.
Shares of Wanda Sports Group,
PARTûOFû#HINESEûBILLIONAIREû7ANGû
Jianlin’s Dalian Wanda Group
conglomerate, tumbled 36% on
July 26, even after the company
cut its fundraising size twice.
Wanda shares closed at
53ûONûTHEIRûlRSTûTRADINGû
DAY ûVERSUSûTHEû)0/ûPRICEûOFû
US$8. The stock continued to fall
last week, closing at US$4.68 on
Thursday, 42% below water.
Wanda initially planned to
raise up to US$500m from the
.ASDAQû)0/ûBUTûSLASHEDûTHEû
proposed deal size on the last day
of bookbuilding to US$308m.
)NûTHEûEND ûITûCAMEûWAYûSHORTû
of even the reduced target and
RAISEDûJUSTû53MûTHROUGHûTHEû
sale of 23.8m ADSs at US$8.00.
The outcome was not helped by
an unusual and confusing string of
UPDATEDûlLINGSûTHATûDISCLOSEDûTHEû
presence of heavy anchor demand,
ascribed to several new investors,
FORû53MûOFûTHEûlNALûPROCEEDS
The Securities and Exchange
#OMMISSIONûSEEMEDûCONFUSEDûTOOû
and it was not until 1:50pm – not
ideal timing on a summer Friday –
that the stock began trading.
4HEûlRST
DAYûmOPûRANKSûASûTHEû
second-worst debut on a US
exchange this year after that of
SOCIALûMEDIAûINmUENCERû2UHNNû
(OLDING ûANOTHERû#HINESEûISSUER û
and sets a grim backdrop for
UPCOMINGû#HINA
TO
53ûLISTINGS
!TûLEASTûTHREEû#HINESEû
companies are gauging investor
INTERESTûINû53û)0/SûATûTHEû
moment. CLOUDMINDS TECHNOLOGY,
a developer of cloud-based
robots backed by SoftBank
Group, and online lender 9F are
PRE
MARKETINGû)0/SûOFû53Mû
and US$150m, respectively. Ping
!Nû)NSURANCESûONECONNECT is also
conducting soft pre-marketing
FORûAûmOATûOFûUPûTOû53BN/NLINEûAUDIOûPLATFORMûLIZHI FM
and bitcoin mining equipment
maker CANAAN are also aiming to
BRINGûRESPECTIVEû53û)0/SûOFû
US$100m and US$200m to the
market before the end of the year.
“How Wanda traded will
DElNITELYûHAVEûANûIMPACTûONû
INVESTORSûAPPETITEûFORû#HINA
TO
53ûLISTINGSû)SSUERSûWILLûHAVEû
to be less aggressive on
valuation to ensure a stable
aftermarket performance,” said
a banker on one of the deals.BELOW WATER
)NCLUDINGû7ANDA ûû#HINESEû
companies have listed in the US
so far this year. Eleven are
TRADINGûBELOWûTHEIRû)0/ûPRICES
However, another banker on
one of the above deals argued
that Wanda Sports, which
among other assets owns the
ORGANISERûOFûTHEû)RON-ANûRACES û
is a media company and that the
mOPûWILLûHAVEûLITTLEûDIRECTûIMPACTû
on technology issues.
“Some upcoming issuers have
their own challenges anyway,”
SAIDûTHEûBANKERûh#ANAANSûSUCCESSû
will rely heavily on bitcoin prices
WHILEû/NE#ONNECTûMAYûNOTûBEû
able to sell shares at or above
US$8bn, the valuation it achieved
INûTHEûLASTûPRE
)0/ûROUND ûSINCEû
VALUATIONûOFûTHEûWHOLEûlNTECHû
sector has come down.”
Wanda Sports’ weak debut is
also bad news for Dalian Wanda
itself, which is planning to list
more assets this year. The
COMPANYûISûLOOKINGûTOûmOATû
#HINESEûRETAILûASSETSûTOTALLINGû
US$1bn through a real estate
investment trust on Singapore
Exchange later this year.
h)NVESTORSûWILLûREMEMBERû4HEYû
may have to pay up to get the deal
DONE vûSAIDûAû%#-ûBANKER
Wanda Sports originally planned
to sell 33.3m ADSs at US$12–$15,
later revised to 28m at US$9–$11.
Morgan Stanley, Deutsche Bank
and Citigroup led the Wanda
3PORTSû)0/ûWITHûHaitong
International, CICC, CLSA andSociete Generale. (^)
WASûSOLDûFORûJUSTûõûPARTLYû
BECAUSEûTHEû32"ûCOULDûNOTû
offer liquidity support.
EMULATING THE US
The current situation and string
of botched resolutions has led
some to call for a complete
RETHINKûOFûTHEûCURRENTû"22$û
rules. The European Parliament
commissioned a report
published recently that suggests
overhauling the current system
and emulating some parts of the
US system.
“The EU resolution
FRAMEWORKûSETûBYû"22$ûISû
being circumvented – one
could go as far as arguing it
was designed for
circumvention,” wrote the
report authors – Georgetown
professor Anna Gelpern and
Nicolas Veron, an analyst at
the Bruegel thinktank.
“This state of affairs implies
both that the intent of the
"22$ûLEGISLATORSûISûNOTûBEINGû
achieved, and that the
OBJECTIVEûOFûBREAKINGûTHEû
bank-sovereign vicious circle
cannot be met within the
current framework. A
comprehensive overhaul of
the entire EU regime for non-
viable banks will be needed.”
Under the US system, the
&EDERALû$EPOSITû)NSURANCEû#ORPû
routinely closes down failing
banks without any public
protection of creditors and
WITHOUTûDISRUPTINGûTHEûlNANCIALû
SYSTEMû4HEû&$)#ûHASûWONû
praise for its handling of many
small bank failures and several
LARGERûONESûINûTHEûlNANCIALûCRISISû
and more recently.
The authors suggest that
more powers could be handed
OVERûTOûTHEû32" ûWHICHûCOULDû
EMULATEûTHEû&$)#û!TûPRESENT û
powers are spread among a
variety of different – sometimes
competing – actors such as the
%#" ûTHEû%UROPEANû#OMMISSION û
national authorities and
resolutions regimes.
They suggest the new
%UROPEANû#OMMISSION ûDUEûTOû
take over in the next few weeks,
COULDûMAKEûREFORMINGûTHEû"22$û
one of its priorities. (^)
quite quickly so we could take
an aggressive pricing approach.
We used guidance and then
lNALûGUIDANCEûINûORDERûTOûPUSHû
the pricing to an appropriate
landing point.”
Gauging fair value was
SUBJECTIVE ûWITHûSOMEûARGUINGû
that the bonds came in line and
others at a negative premium.
h7EûDIDûmATTENûTHEûVALUATIONSû
quite substantially. That was
because we had more demand
on the longer tranche,” said the
second syndicate banker.
MISSED THE BOAT
Quite why investors are piling
into trades at a traditionally
quiet time of year is puzzling
bankers.
/NEûEXPLANATIONûISûTHEûCHASEû
for yield by cash-rich accounts,
but given that the total euro
high-grade return is up by
nearly 8% for Triple B credits,
according to JP Morgan, and
more than 6% for other ratings
categories with the exception of
Double A, many fund managers
no longer need to buy.
4HEûlRSTûSYNDICATEûBANKERû
says a more nuanced
explanation is that some
investors missed the boat in
THEûlRSTûQUARTERûBYûSITTINGûONû
the sidelines in anticipation
that rates volatility would rock
credit markets.
But with rates hurtling ever
lower – the yield on 10-year
Bunds hit another record on
7EDNESDAYûnûANDûTHEû%#"û
expected to resume bond
buying after the European
summer season, these
investors are now chasing
their tails. “And the only place
to get liquidity is the primary,”
he said.
BNP Paribas and Deutsche Bank
were global coordinators and
structuring agents. They were
JOINEDûASûLEADSûBYûBarclays,
BayernLB, Citigroup, HSBC and
Morgan Stanley.
EnBW’s senior ratings are
A3/A–/A– with the notes
expected to be rated Baa2/
BBB–/BBB–.
Additional reporting by Robert
Hogg