Venture Capital IPO Pulled In Hong Kong

by Mary Swire, Investors Offshore, Hong Kong

22 January 2002

Venture Capital firms Warburg Pincus and Pama Group have pulled a proposed IPO for MediaNation, an outdoor advertising company, which had been set for 24th January on the Growth Enterprise Market (GEM), saying that investors failed to understand the concept of venture capital backed public offerings.

The IPO would have raised new capital for the company of HK$445.6 million from the sale of 171m shares, plus the VC firms would have disposed of a further 100m existing shares, representing 37% of the total listing.

Paul Pong, managing director of Pegasus Fund Managers, said the venture capitalists had decided not to sell their shares because potential investors had been scared off by the prospect of the major stakeholders selling out.

Even though MediaNation set its IPO price at the bottom of its indicated price range, HK$2.60 a share, investors were lukewarm, and the two venture-capital firms called a press briefing to address investor concerns that they were using the listing to get out of the company. Themselves unhappy with the low issue price, the VCs offered not to sell their shares for 12 months after the listing. But it was all to no avail, and the issue was pulled over the weekend.

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