IPO to Be Test For Asian Market

To many pundits, Corp.’s IPO on the NASDAQ will be a defining moment for Asia’s Internet industry. The success or failure of will influence the prospects of other Asian Internet firms that follow the portal operator to Wall Street.

As Asia’s first Internet IPO on the NASDAQ, the February share offering of Singapore ISP Pacific Internet was anxiously awaited by the regional Net industry.

However,’s move is seen by many industry observers as more significant because China will become the second largest market by 2003 and the share offering is a content play.

“If the do well, all of us will do well. If they do bad, we will do bad,” said Hanson Cheah, executive director of AsiaTech Ventures Ltd.

Cheah indicated that if’s share offering soared into the NASDAQ Hall of Fame, more American venture capital and private investors would be attracted to Asia.

The US$56.3 million share offering has caught the eye of Wall Street because of its domain name and the pedigree of its principal shareholders.

America Online (AOL) recently acquired a 10 percent stake in the Hong Kong-based company with an option to grab 15 percent more. The American financial establishment sees this as AOL’s bid to enter the China market.

The other significant investors include New World Infrastructure (22.7 percent), a Hong Kong infrastructure firm, Xinhua News Agency (13.6 percent), China’s government-run news agency, 24/7 Media Inc (9.5 percent), U.S. Internet advertising firm, and CMC Magnetics (4.4 percent), a Taiwanese CD-ROM manufacturer.

Recently, however, has come under fire in the press over its commercial ventures and the performance of its Internet properties. Prestigious papers like the New York Times and the Wall Street Journal have jumped on the band wagon and published articles critical of

Moreover, hasn’t had much success in surveys that cover China’s Internet industry.

A January survey conducted by CNNIC, China’s state-sponsored version of InterNIC, ranked as 17th in popularity among China’s Web sites, well behind competitors like Sohu,, Yahoo, and Netease.
In a recent survey conducted by Australian analyst firm www.consult, didn’t make it into the top 20 Chinese sites.

A employee told, “We are late entrants in the market and we recognize that we have some catching up to do.”

Critics attribute the poor performance to a range of factors including bad management, good competition, or the looming shadow that Xinhua, as a major shareholder, casts on the company.

Nevertheless, most analysts believe that’s poor performance as a portal won’t have an impact on its debut on the NASDAQ.

“From an IPO standpoint it doesn’t matter, but in the future it does matter,” said Cheah.

Antonio Tambunan, manager of the Internet practice at Deloitte & Touche Corporate Finance in Hong Kong, said “While there may be numerous sites that may have better content, you can’t deny that the average Joe halfway around the world will most probably type in “” before he types in anything else for China content.”

“I wouldn’t be surprised if their IPO skyrocketed based just on that factor,”
Tambunan continued, “That said, a URL is much like a phone number. If there’s nothing much to talk about on the other side, I probably wouldn’t call that number again.”

Even though may benefit from its NASDAQ listing, many observers believe that the company still has an uphill battle against the other more popular Chinese content sites which are also gearing up for their own listings.

They point out, in order for to succeed, the company needs use the money from the IPO to develop a solid management and development team as well good relationships with content providers.

Officials at indicate that this is what they are endeavoring to accomplish.

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