Hong Kong-based Asia Online provides internet access, web hosting, network integration and applications services to small and medium sized Asian companies seeking to expand their businesses online. Credit Suisse First Boston (CSFB) planned to handle the listing.
"In light of market conditions in which comparable companies have shed up to 40% of their value since we filed, we reluctantly came to the conclusion that this was not the time to go forward," says Steven Foland, CSFB's head of technology banking. "This is too good a company to put out in the public market right now. I don't want it to have the same result as some of its competitors."
Asia Online is not directly comparable with one single company since it operates several businesses. One of its closest competitors in Asia is iAsiaWorks, an internet service provider based in California that's hoping to become a web hosting company. iAsiaWorks listed on Nasdaq at the beginning of August, at roughly the same time Asia Online filed its application. Since then iAsiaWorks, which was underwritten by Goldman Sachs, has fallen 25% to $9.75 from its IPO price of $13.00.
Other web-hosting and colocation companies have also fallen. US-based Exodus, which rents space for, and manages, computer servers that run websites in its data centres, has fallen 22% to $56 since 1 August. Scient, a US internet commerce consultant, has fallen 45% to $22.81 over the same period, and USinternetworking, an applications service provider, has fallen 52% to $7.00.
Deep pockets - but how deep?
"We still have investors with deep pockets and they're still backing us, so we don't think we'll have any difficulty raising funds if we need to," says Mike Dunn, a spokesman for Asia Online. The company has some $50 million cash in the bank.
Still, the pockets of its partners are less deep as a result of the company's decision not to list. Shares of Japanese internet investment company Softbank, which owns nearly 30% of Asia Online, fell as much as 8% on the news.
And it's not good news for CSFB either, which recently rolled out its strategy to win Asian technology business with great fanfare. The bank ranks among the top three US and European underwriters but has lagged rivals Goldman Sachs and Morgan Stanley in Asia. It had hoped to start turning that trend with what it perceives as quality companies such as Asia Online. Foland says the bank may help Asia Online raise more money privately, but says the company is in no great hurry.
"I'm here to do the right thing for my client, and putting them out in this market would have been irresponsible," Foland says.
In the meantime, one of Asia Online's competitors in the data centre business, Hong Kong-based iAdvantage, plans to raise HK$2 billion ($256 million) through an initial public listing on Hong Kong's secondary Growth Enterprise Market, according to a report in the Oriental Daily News. iAdvantage is the data center unit of Sunevision, which is the internet flagship of property company Sun Hung Kai Properties.