Based on a report released by Ernst & Young on December 27, 25 Chinese companies went public in the United States in 2017, with $4 billion total financing. The number of IPOs and the amount of financing increased by 178% and 83% respectively year-on-year. Compared to 7 IPOs in 2016 and 4 in 2015, 2017 undoubtedly was the "listing year" for Chinese company in the US.
In the first half of 2017, the progress was a little bit slow, with only 4 IPOs raising $274 million. The number was flat and the amount of financing decreased by 39% on the same period a year ago. However, in the second half of the year, the number of IPO showed a rapid growth. Best Inc (NYSE: BSTI), Secoo (Nasdaq: SECO), Qudian Inc. (NYSE: QD), and Sogou Inc.(NYSE: SOGO) etc. have been listed.
Among those listed companies in 2017, 7 raised less than $30 million, 5 raised between $30 to $100 million, 8 raised $100 to $200 million and 4 beyond $200 million in financing. Morgan Stanley and Credit Suisse underwrote 7 Chinese companies IPO respectively.
The fintech company, Qudian, raised $900 million, making it the largest IPO among Chinese companies and fourth in the U.S. IPO this year, followed by Sogou (NYSE: SOGO), Best Inc (NYSE: BSTI), Ppdai Group Inc (NYSE: PPDF) and so on.
However, as of December 20, 10 stocks traded below their offer price. Among them, Qudian is the biggest loser, with a 46.4% drop. Another fintech company-- Ppdai--did not perform very well either, losing 44.2%. Among six listed fintech companies, only China Internet Nationwide Financial Services Inc.(NASDAQ: CIFS) showed positive, reaching its high at $66.1 on November 28. And it is the best performer in 2017. Hexindai Inc.(Nasdaq:HX) also remains in the positive, while all the other fintech shows a downtrend.
As of December 22, the other top five best performing IPOs in 2017 included Bright Scholar Education Holdngs Ltd (NYSE: BEDU), Newater Technology Inc.(Nasdaq: NEWA), ZK International Group Co Ltd (Nasdaq: ZKIN), and ReTo Eco-Solutions Inc(Nasdaq: RETO). Sogou and Best Inc received the most media attention, but both of them traded below the offer prices nearly 10%. The other top five worst performing IPOs included Ppdai Group, Secoo, Jianpu Technology Inc.(NYSE: JT), and RYB Education Inc. (NYSE: RYB).
As for underwriters, as noted above, Morgan Stanley and Credit Suisse led the pack. Morgan Stanley was the lead underwriter of Qudian, with co-underwriters including UBS, Citigroup, CICC, Credit Suisse, Stifel, Needham and Nomura. Large underwriters such as Citigroup, Goldman Sachs, JPMorgan and China Renaissance each underwrote several IPOs: Citigroup 5 and the rest 4 respectively.
In terms of small underwriters, Network 1 Financial, Boustead Securities, and ViewTrade are the leaders among small investment banks, each underwriting three IPOs.
2017 was the busiest year for IPOs since 2007. However, the performance of the new listed Chinese stocks in 2017 is below expectations. The Wall Street Journal quoted Anh Lu, a Hong Kong-based portfolio manager from T. Rowe Price: "These stocks are either poor in business or listed too early, and their top priority requirement is high valuations."
Even so, several China Concept Stocks did great job in the first trading day of 2018. Weibo(NASDAQ: WB), for example, gained 9.39%, Xunlei (NASDAQ: XNET) jumped 9.16%, Alibaba (NYSE: BABA )gained 6.51%, and Momo(NASDAQ: MOMO) was up 5.64%. In 2018, the China Concept Stocks will likely remain the focus of investors.