When China Mobile Games and Entertainment Group (CMGE) arrived on the NASDAQ stock exchange on Tuesday, it wasn’t met with the warmest of welcomes, as the high bid price was less than 10 percent of the company’s $40 ask price, Tech in Asia reports.
Chinese companies have been hesitant to list in the US as of late, in part because of several accounting scandals and the Facebook IPO debacle. CMGE is the second company from the country to list in the US this year, as well as the first to list on NASDAQ in 2012.
CMGE’s listing is unusual in that it isn’t technically an IPO. Instead, it listed by way of introduction and is offering American depositary shares (ADSs), which are equal to 14 Class A shares, on the stock market.
Chairman Zhang Lijun told Xinhua that his company was more interested in expanding its brand name through the listing, rather than raising money. It’s a good thing that CMGE isn’t in need of cash, as the listing hasn’t attracted strong interest.
“As of Tuesday’s close, investors had put in a high bid price of 3.90 dollars per share, not even close to the ask price of 40 dollars,” the publication reported.
CMGE, which emerged from state-affiliated media group VODone, boasts that it is China’s largest mobile game developer, at least in terms of revenue over the past two years. The company also has a mobile handset design business that cooperates with its gaming division.
Several Chinese firms are pursuing IPOs in the US. For instance, UC Web has said it is shooting for next year. Ecommerce leader Alibaba, which recently completed the first stage of buying back Yahoo’s stake, is also widely believed to be pursuing an IPO. But, if the response to CMGE’s introduction continues to be poor, it could cause companies to think twice about listing in the current climate.
Image credit: John Moore / Getty Images
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