Alibaba's IPO in Hong Kong

Alibaba looks to be world's 2nd largest Internet IPO

Alibaba.com kicked off the road show of its IPO yesterday. Its indicative IPO prices ranged from 10 to 12 Hong Kong dollars. Based on such calculations, Alibaba's IPO will raise 10.31 billion Hong Kong dollars, beating the expected 7.8 billion Hong Kong dollars and making it the largest IPO by a Chinese Internet company.

In 2003, Google was listed on the NASDAQ, raising 1.67 US dollars (about 13.026 Hong Kong dollars). Alibaba will hopefully become the world second largest Internet IPO. It will also become the largest in Hong Kong, replacing the record set by Tencent（0700.HK), which raised 1.55 billion Hong Kong dollars.

There were strong demands for the shares of Alibaba.com. Following Yahoo.com and Guo Taiming of Honhai Precision Industry, it acquired another five new investors: Industrial and Commercial Bank of China, Wharf president Wu Guangzheng, Guo Henian of Kerry Group Limited, families of Sun Hung Kai Properties, and American International Group, Inc. (AIG) .

Chairman of Mengniu Group Niu Gensheng and Secretary of the Bo'ao Forum for Asia Long Yongtu will act as the independent directors of Alibaba.com.

For more details, please read the full story in Chinese (http://www.dfdaily.com/node2/node27/node120/userobject1ai33236.shtml).

Wall Street Journal on Chinese IPO - LFT, FUQI, etc.

Congrats to ChinaIPO! CI's posts on our blog provided insightful information and many blogs around the world syndicated CI's articles. It has been the most popular articles in Cyber space according to StatCount report:

*** marketswimmer.blogspot.com/2007/10/fuqi-international-fuqi.html
** marketswimmer.blogspot.com/2007/10/longtop-financial-technologies-limited.html
* marketswimmer.blogspot.com/2007/10/crystal-ball-report.html

In today's Wall Street Journal, the news finally broke out:

Latest China IPO in U.S. Soars 85%

Longtop Financial Wows, Eclipsing
U.S. Energy Firm
By LYNN COWAN
October 25, 2007; Page C3

For the second day in a row, U.S. investors were wowed by the initial public offering of a Chinese company and paid less attention to an American energy company.

The resulting market activity sent the IPO of Chinese software maker Longtop Financial Technologies Ltd. up 85% yesterday on the New York Stock Exchange, the second-best IPO debut of the year, after Athenahealth Inc.'s top 97% gain. Meanwhile, the day's other IPO, Vanguard Natural Resources LLC, fell below its IPO price.

On Tuesday, a similar theme played out: Chinese jeweler Fuqi International Inc. rose 16% on its first day of trading on the Nasdaq Stock Market, while Kansas petroleum refinery CVR Energy inc. gained 7% on the NYSE.

Longtop closed at $32.40 a share, up from its IPO price of $17.50. It sold 10.4 million American depositary shares at a price above its expected range of $14 to $16, which had already been raised by $2 last week.

Based in Xiamen, China, Longtop is a software developer and technology-services provider that focuses on financial institutions in that country, including three of the four largest state-controlled banks: China Construction Bank, Agricultural Bank of China, and Bank of China.

Derek Palaschuk, the company's chief financial officer, said, "The banking infrastructure and business processes are so different in China that a lot of solutions from U.S. companies just don't work."

The company plans to use its IPO proceeds in part to purchase an office building in Xiamen and to pay dividends to its former private owners; the company doesn't intend to pay dividends to new shareholders who purchase stock in the IPO. Goldman Sachs Group Inc. was the global coordinator for the IPO.

In contrast to Longtop's swift gains, energy company Vanguard Natural Resources' IPO stalled on its first day of trading.

The stock closed at $18.94 a share on NYSE Euronext's NYSE Arca marketplace, down about 1% from its IPO price of $19 a share. The company sold 5.25 million units at a price at the low end of its expected range.

Vanguard is an oil and gas exploration company with properties located in Kentucky and Tennessee.

The units it sold in the IPO represent limited-liability interests in its underlying business, a tax structure that allows it to pay out available cash in the form of a generous dividend. Vanguard intends to pay an annual dividend of $1.70 a share, which at the IPO price equates to a yield of nearly 9%.

Energy companies structured as partnerships haven't fared well with investors recently. The last two, Encore Energy Partners LP and Quicksilver Gas Services LP, ended their first days of trading flat.

Citigroup Inc. was the book-running manager on Vanguard's offering.

Write to Lynn Cowan at lynn.cowan@dowjones.com

Link to WSJ: Latest China IPO in U.S. Soars 85%
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If you read CI's report on October 15th, you could have made some money:

FUQI International (FUQI)
Longtop Financial Technologies Limited

IPO Report - LFT, FUQI, Arbitrage and More

ChinaIPO (CI) has recommended LFT and FUQI a few while ago, both of them are doing well.
FUQI has gone up 15% in the first hour of trading:


And LFT kept 23% of gain on Wednesday (Oct. 24, 2007):



What CI has explored was the reverse strategy of IPO Arbitrage (sounds like a hedge fund, huh?). Statistically, IPO should be sold, but recently Chinese IPOs buck the trend according to some undisclosed research as saying.

Dictionary___

IPO: Initial Public Offering

Hedge Fund: An aggressively managed fund that uses advanced investment strategies (called argitrage) to avoid risk (the original intention, that's why it's named as hedge, but the strategies they are using are sometimes so aggressive, the hedge does not mean anything any more). Unlike the regular fund, they can buy long and sell short (often done at the same time) and use leverage (use derivative instrument such as options). The managers are paid by charging managing fees (like the normal mutual) and up to 20% performance incentives (no mutual can do so). The regular mutual fund is intended to beat the index (here it goes, the game is called SEEKING ALPHA - sounds familiar?). For instance, if general market is down by 10% and you are only down 5%, you are a hero. But that's not for hedge, a hedge needs to be consistently making money in both bull and bear market (by shorting).

More Hedge fund stories will follow.

Have fun,

Market Swimmer

such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns