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Business / Markets

Who's next? Investors guess which firms will exit US bourses

(Agencies) Updated: 2015-06-16 08:02

The record number of offers to take United States-listed Chinese companies private is stoking speculation on which stocks may be targeted next.

The list of candidates to abandon their US trading through buyouts include real-estate website SouFun Holdings Ltd and online cosmetics retailer Jumei International Holding Ltd, according to analysts at China International Capital Corp and JL Warren Capital.

Fourteen Chinese companies trading in the US have received offers to buy out shareholders since the start of April, the most ever in a single quarter, according to data compiled by Bloomberg.

Surging valuations on China's domestic equity market amid a world-beating rally and a pledge from authorities to facilitate fundraising for high-tech companies have made overseas listings less appealing. Chief executive officers of Baidu Inc and Jumei said they are interested in returning to the local stock market.

"When a company's management feels the stock is neglected in the US and believes it'll surely get a much higher multiple in the local market, it's likely to go private and seek a relisting in China," Henry Guo, an analyst at Summit Research Partners, said in San Francisco on Friday.

"It's also easier for companies with large stakes owned by leading shareholders to go through the privatization process."

Recruitment website Zhaopin Ltd and Internet news outlet Phoenix New Media Ltd are also among potential buyout targets, according to a Credit Suisse Group AG note last Wednesday.

Investor speculation about buyouts has boosted some companies' US-traded shares. SouFun has soared 34 percent in the past two weeks to a seven-month high.

Leju Holdings Ltd, SouFun's smaller peer, surged 24 percent last week for the biggest rally since August. Credit Suisse and JL Warren analysts both mentioned Leju can seek privatization, after controlling shareholder E-House China Holdings Ltd received a buyout bid last week from its chief executive officer and a board member, who own a combined 26 percent of the company.

E-Commerce company China Dangdang Inc, which is on the candidate list of investment bank CICC, jumped 27 percent last week, the steepest gain in 15 months.

A Bloomberg index of the most-traded Chinese stocks in the US posted a two-week gain to a record on Friday amid a flurry of buyout announcements, including six in the past week alone. A $1.4 billion offer to buy 21Vianet Group Inc, an Internet data-center operator, and a $1 billion bid for Homeinns Hotel Group, China's largest operator of budget hotel chain, were the biggest by deal value.

Different from the wave three years ago for Chinese companies to leave the US, which was triggered by short sellers' scrutiny of overseas traded firms including Sino-Forest Corp, the current one consists "larger market cap names doing dual-listings", 86Research Ltd analysts led by Ming Zhao wrote in a note on Friday.

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