Chinese podcast platform Ximalaya has suspended plans for a Hong Kong listing after its attempt to raise up to $100 million.
Although the Spotify-like platform, which is backed by Chinese tech giants Tencent, Xiaomi and Baidu, and Sony Music Entertainment, aimed for a heavily reduced fundraising target of $50 million to $100 million, it was signed, prompting it to hold back about it the continuation of the IPO, according to bankers and early-stage investors.
Shanghai-based Ximalaya’s experience is a fresh example of how bumpy the IPO road remains for data-rich Chinese companies looking to attract new investors in Hong Kong and New York as US regulators tighten audit disclosure requirements and Chinese officials are trying to roll up overseas listings over cybersecurity concerns.
“Sentiment was so bad at the time that even Ximalaya failed to get enough investors onboard,” said a Hong Kong-based IPO banker, adding that the Spotify-like service rose to $27 billion in its latest funding round .rmb ($4.02 billion) , used to be relatively popular among its peers.
Ximalaya originally shelved a plan to list in the US after China’s top internet watchdog, the Cyberspace Administration of China (CAC), suggested it back off, according to a state investor in the company. That deal reportedly aimed to raise around $500 million.
The investor added that the company has received blessings from both the CAC and China’s securities regulators to go public in Hong Kong, although privacy rules for a new offshore listing regime are yet to be finalized.
The company’s latest setback comes during a rough year for Hong Kong stock sales. New listings in the city have raised just $2.4 billion year to date, down 94 percent from the same period a year ago, according to data from Dealogic.
The high end of Ximalaya’s fundraising target, while modest by historical standards, was still well above the 2022 norm. The 19 companies launched in Hong Kong this year have averaged just US$94 million. dollars raised.
Another early-stage investor in Ximalaya said the company’s revived share sale has been pushed ahead despite “below market conditions,” partly due to demand from some of the company’s private equity backers. Ximalaya is also under pressure not to price stocks below levels at which state backers have bought in, they added.
It has been reported that the company is in talks with a government agency in Shanghai that could acquire a special management holding known as “golden shares”. Such stocks, which give government agencies veto power over major decisions including an IPO, are one of many new practices regulators have introduced in recent years to give greater leverage to private companies that handle a large amount of key data.
Another of the few Chinese companies looking to test the appetites of global investors is Noah Holdings, a Sequoia-backed provider of personal wealth management products. The company is holding reverse roadshow meetings for a proposed listing in Hong Kong this week, according to a person familiar with the matter.
Ximalaya, CAC and the China Securities Regulatory Commission did not immediately respond to requests for comment.