Changyou.com completes first Nasdaq listing for 2009

Chinese online game operator and developer Changyou.com yesterday became the first company to list on Nasdaq in 2009 and the first Chinese company to list in the US since early August last year. The company, which is a spin-off from Chinese internet portal operator Sohu.com, set the price at the top of the indicative range, allowing it to raise $120 million.

Sources say the deal could have been priced above the initial range of $14 to $16, as is allowed in US listings, but the involved parties decided to stick with $16 to ensure stable secondary market trading. The tactics appear to have worked as the share price was up about 30% at $20.76 with less than one hour left of yesterday's session. US market watchers attributed the strong debut partly to the high subscription rate.

The deal consisted of 7.5 million American depositary shares (ADS), each representing two ordinary shares. Half of the ADS were backed by primary shares, while the other half were secondary shares sold by the parent company. There is a 15% greenshoe, which, if used, could bring the total deal size to $138 million. The ADS represents 14.2% of the company pre-shoe and 16.3% post-shoe.

The order book was 15 times covered. Sources say it attracted predominantly US demand -- around 70% of the total -- while most of the remainder came from Asia. Long-only, momentum and sector specialist funds all participated. A number of existing shareholders of Sohu.com also bought a direct stake in the subsidiary.

Demand was so strong that bookrunners chose to close the books a day earlier than planned, on Tuesday, New York time. The Thursday debut remained unchanged, however.