Upcoming week's Chinese IPO stocks

Only one Chinese company is lined up for IPO the week of November 13th, 2017 (please correct me if this is wrong) - Jianpu Technology Inc (JT), Expected pricing date is on the 15th of November 2017. Here are some interesting facts -

JT offering Source: From Jianpu’s filing statement

  • As expected, JT uses VIE structure to operate in China - but their VIE revenue contribution to overall revenue is ~8%
  • The VIE, Beijing Rongdiandian Information Technology Co. Ltd. or RDD, is 40% owned by Ms. Dawei Huang, 40% owned by Mr. Jiayan Lu and 20% owned by Mr. Caofeng Liu. Typically in VIE strcutures, CEOs and key management team owns the VIEs - but in this case 40% of VIE is owned Ms.Dawei Huang, who is the wife of the CEO and CEO doesn’t have any ownership rights in the VIE.

    RDD is 40% owned by Ms. Dawei Huang, who is the wife of our CEO, Mr. Daqing (David) Ye, 40% owned by Mr. Jiayan Lu, who is our chief operating officer, and 20% owned by Mr. Caofeng Liu, who is our chief technology officer.

  • Here’s an example from the past (though it is little dated), when VIE was dragged into the divorce court.

    A further potential concern with VIE structures was highlighted during the recent initial public offering of online video service provider Tudou and the highly publicized divorce proceedings of Tudou’s founder, Gary Wang. In the months leading up to the IPO, the ex-wife of Mr. Wang, who holds 95% of the equity interests in Tudou’s VIE, initiated a lawsuit against him in connection with their divorce, seeking the division of the equity interest in the VIE held by Mr. Wang, arguing that it formed part of the community property during their marriage.

  • Recent quarter, JT made $76 million, with a net loss of $2.5 million. For the entire last year 2016, JT made revenue of $52.5 million with a net loss of $26.9 million.

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