Corporate Financing Analysis - Chinese Unicorn Takes The Backdoor Listing Route - 09 OCT 2017

Backdoor listings, whereby firms looking to go public in a hurry acquire, or are acquired by companies that are already listed on their target exchange, remain a popular tool for corporate financing in China. The latest reminder of this tool to raise fresh funds came in the form of local online video platform Mango TV, which was snapped up by ChiNext-listed TV shopping platform Happigo Home Shopping in a CNY9.5bn (USD1.4bn) deal to gain a listing on Shenzhen's high-growth, 'Nasdaq-style' bourse. Such a snappy move gave Mango a strategic advantage by giving it the jump on its rival iQiyi, which had already announced plans to go public in the US at some point next year.

At a time when China is experiencing rapid growth in the number of so-called 'unicorns' it plays host to ( see ' China VC Industry To Continue Benefitting From Slowing Economy ' , September 13 2017), the country's stock exchanges are recording strengthening interest in floatation deals from unicorns, even when such moves are being tempered by the Chinese regulators' attempts to dampen speculation on its local bourses more broadly ( see ' China ' s IPO Run To Slow After CSRC Intervention ' , June 7 2017). In this vein, Mango TV has become the second Chinese unicorn after financial services provider ZhongAn Insurance, which raised USD1.5bn from a Hong Kong listing last month to move onto the public markets.

Mango TV itself gained unicorn status in June of last year after securing a series-B round of funding worth USD228mn which valued the firm at CNY13.5bn (USD2bn). The deal with Happigo, meanwhile, valued the firm at USD1.4bn. While the firm's growth has been rapid since its 2006 beginning we note that Mango TVs current valuation appears relatively modest when compared with China's ten largest Unicorns, which all carry a valuation of USD7.3bn or over - according to China Money Network data correct to September 2017.

The Growers
China - Top Ten Largest Unicorns By September 2017, Valuation, USDbn
Source: China Money Network , BMI

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