Chinadata and iHuman have both filed for initial public offerings on the New York Stock Exchange this week, joining a string of other Chinese companies fundraising in the US despite threats from Washington to decouple the world’s two biggest economies.
Bain Capital-backed data centre solution provider Chinadata filed Tuesday for an IPO, seeking to raise between US$500 million to US$600 million, according to a person familiar with the transaction. iHuman, a provider of e-learning apps for children, has also filed to list its American depositary shares on the exchange, according to its preliminary filing document.
These two latest deals will bolster a strong run by Chinese companies listing in the US this year. Chinese companies have already raised about US$6.96 billion from US listings across 19 IPOs, up from US$2.55 billion across 17 deals, data from data provider Refinitiv shows.
If the two IPOs complete within this month, it will likely bolster the total amount of funds raised by Chinese companies to above US$7.5 billion, roughly tripling the volume from the same period a year ago. Companies like electric vehicle start-up Xpeng, and real estate platform Beike Zhaofang, have completed mega IPOs at US$1.5 billion and US$2.12 billion respectively, after both were able to price their deals above their initial targets on strong demand from investors.
The IPOs of Chinadata and iHuman come amid a slide in the Nasdaq Composite, which suffered its biggest drop since the March sell-off, ending Tuesday with three-straight days of decline. The index was down 10 per cent from its record high reached last Wednesday. An extended correction in US tech stocks might put investors’ strong appetite for their Chinese peers seen so-far this year to the test.
This year’s strong fundraising momentum by Chinese firms has come despite US-China relations hitting a new low, as US President Donald Trump has this week ratcheted up tensions by threatening to decouple the US economy from that of China. This has come after a working group of top US regulators recommended in August that foreign issuers, including Chinese firms, be delisted from American bourses if they do not provide access to the working papers for their audits for review by January 2022.
For Chinadata Group, underwriters for the deal include Morgan Stanley, UBS, Citi and China Renaissance. Bain Capital owns about 57 per cent stake in the company, according to its preliminary document filed with the US securities regulator. The Beijing-based company operates data centres in China, Malaysia and is building another one in India.
Other shareholders include Dutch pension fund APG; and SK Holdings, the parent of South Korean conglomerate SK Group. SK Holdings in August bought an 8.9 per cent stake in Chinadata at US$300 million, a deal that valued Chinadata at US$3.1 billion.
The company derived some 80 per cent of its revenue in the first half this year from ByteDance, the parent of video-streaming app TikTok, which is facing a deadline this month from the Trump administration to sell its US operations.
For the six months ended June, Chinadata’s net loss was 59.4 million yuan (US$8.7 million), up from 58.1 million yuan in the same period a year ago.
iHuman, a provider of learning apps targeting children aged between three and eight, has also filed for an initial public offering on the New York Stock Exchange overnight. Underwriters for the deal are Citi and Credit Suisse.
iHuman claims a user base of 10.3 million average monthly active users in the second quarter this year, and 1.4 million paying users, data from its US filing shows. Its apps offer content to children in the fields language, maths, literacy and reading.
The company plans to use the net proceeds raised on expanding its product offerings both within China and overseas, and on improving its technology infrastructure.
For the six months ended June 30, iHuman reported a net income of 5.6 million yuan, reversing a net loss of 271.8 million yuan in the same period a year ago.
China’s content-based complementary childhood education market is forecast to grow to 460.9 billion yuan in revenue in 2024, from 111.4 billion yuan, representing a compound annual growth rate of 32.8 per cent, according to consultancy Frost & Sullivan.
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