Chinese firms abandon US market at fastest pace since 2015 amid rising tension, tighter listing scrutiny

China’s biggest online classified firm 58.com latest to agree to a buyout deal

Four US-listed Chinese companies have announced go-private deals totalling US$8.1 billion this year, the highest since 2015’s US$29.8 billion

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Chin’s biggest online classified firm 58.com on Monday agreed to a buyout deal led by private equity firms Warburg Pincus and General Atlantic. Photo: Handout

Published: 11:45am, 17 Jun 2020Updated: 11:22pm, 17 Jun 2020

Chinese companies are ditching their US listings at the fastest pace since 2015 as they grapple with rising tensions between Beijing and Washington.

The latest is China’s biggest online classified firm 58.com, which on Monday agreed to a buyout deal led by private equity firms Warburg Pincus and General Atlantic. An investor group backed by Chinese tech tycoon Pony Ma’s Tencent Holdings said last week it will take Bitauto Holdings private in a deal valuing the car-listing website at US$1.1 billion.

So far this year, US-listed Chinese companies have announced four go-private deals with a combined value of US$8.1 billion including debt, according to data compiled by Bloomberg. That is up from zero during the same period last year. It’s also the highest value for any full year since 2015, when US$29.8 billion of such buyouts were announced.

The uptick comes as President Donald Trump weighs tighter scrutiny on Chinese companies after a string of accounting scandals including Luckin Coffee that have burned some of Wall Street’s biggest names. Nasdaq is planning new rules that would make initial public offerings more difficult for some Chinese firms, potentially curtailing their access to the world’s biggest capital market.

Nasdaq is planning new rules that would make IPOs more difficult for some Chinese firms. Photo: Reuters

The Covid-19 pandemic has also made some US-listed Chinese companies look relatively undervalued, according to Steven Tran, a Hong Kong-based partner at law firm Mayer Brown.

“Add in the generally negative sentiment in the US on all things China-related and you have the perfect recipe for an increase in take-private transactions,” he said.