VIEs remain an issue for Chinese tech IPOs

Author: Ashley Lee | Published: 13 Nov 2013
  • Chinese technology companies are returning to the US markets, with 58.com and Qunar completing successful initial public offerings (IPOs) in the last few weeks;
  • But it seems that US investors are overlooking risks related to variable interest entities (VIEs), focusing instead on growth stories in the Chinese technology sector;
  • For example, 58.com filed an eleventh-hour amendment to its prospectus regarding a dispute over ownership of one of its VIEs. It performed well anyway, with its share price rising over 45% following its debut;However VIEs will remain a feature of this market. Foreign investment restrictions remain in the tech sector and therefore more direct foreign ownership of these 
  • companies is not permitted.

Chinese technology initial public offerings (IPOs) have recently made a successful return to...