A boom of emerging-market listings prompted the Australian SIC to publish a report warning investors that these companies frequently failed to implement good corporate governance; 760 of ASX’s 2184 listed entities had operations or assets in emerging markets

Michael Bleby Reporter

Chasing the dragon: oversubscribed 99wuxian IPO closes

Published 06 September 2013 08:25, Updated 06 September 2013 11:46

Ross Benson says 99wuxian’s IPO has attracted a strong response despite not being particularly large. Photo: Rob Homer

The backers of 99wuxian are celebrating after the Chinese provider of an online marketplace for smartphone users closed its initial public offering just two weeks into a planned four-week period it had allowed to raise $20 million. The oversubscribed offering of 40-cent Chess Depositary Interests (CDIs), which are expected to start trading on the ASX on October 8, gives the company a market capitalisation of just under $410 million. About half of the shares will go to funds and half to individual investors, 99wuxian chairman Ross Benson said.“It’s a thrilling result,” Benson told BRW late on Thursday. “We’re encouraged to see funds come into an IPO which is not large in size. They’re obviously viewing the sector and business as a good opportunity.”

99wuxian’s “compliance” listing helps gets the company’s financial structure in a state that is compatible with Western investors and will permit it to raise more funds for further expansion. It is one of a recent spate of Chinese companies, along with clothing retailer Sunbridge, that is seeking to list on the ASX.

Regulator’s warning

A boom of emerging-market listings prompted the Australian Securities and Investments Commission to last week publish a report warning investors that these companies frequently failed to implement good corporate governance, risk management and disclosure practices.

There were no systemic risks to Australian investors, but given that s, or more than a third, of the ASX’s 2184 listed entities had operations or assets in emerging markets, investors could not ignore the risks, the regulator said.

Ironically, a day after the ASIC report came out, China-based TTG Mobile Coupon Services, a payments technology company that listed in Australia in November, disclosed to the ASX that it had “inadvertently omitted” information from its annual report published two months earlier in June.

“TTG confirms that cash and other assets in a form readily convertible to cash, held at 26 November 2012 (the date of admission to the ASX), have been used during the period from 26 November 2012 to 31 March 2013 in a way consistent with its business objectives,” the company said.

Benson, whose Sydney-based firm Investorlink China also brought TTG to market, is a TTG director.

“I’m sure that with the case of TTG it was a genuine error,” he said. “Often when you have a newly constructed board it does take a full year for them to fully appreciate that there are a lot of compliance disclosure requirements.”