LaShou Group, a Chinese operator of a Groupon-like group-buying website, is seeking to raise as much as $80 million from a US initial public offering.
The company, which filed for an IPO of up to $100 million with the US SEC in late October, launched a roadshow yesterday, less than a week after Chicago-based Groupon made its successful debut on Nasdaq.
After months of investor jitters about the fate of its public listing, Groupon’s stock hit a high of $31, 55% above its $20 offer price, on its first day of trading last Friday — an encouraging sign for LaShou’s plan to list in the US.
Groupon closed at $26.11 on Friday and had edged down to $25.97 by the close on Monday.
Since LaShou, which means “hand-in-hand” in Chinese, launched its website in March 2010, its registered users have grown from 53,000 to about 16.8 million at the end of September this year, according to its IPO prospectus. During that time, about 6.8 million paying users have bought more than 43.3 million vouchers for services and products from the company.
Some critics have questioned the sustainability of Groupon-type business models, but LaShou says that significant market opportunities exist for its future growth. It noted in the prospectus that more than 30% of China’s population now uses the internet, but only a small percentage of them buy services or products online.
LaShou is selling 20.4% of the company or about 5.36 million American depositary shares (ADSs), which are all backed by new shares. Each ADS represents 36 class-B ordinary shares.
The price range is from $13 to $15 per share, which means the online company could raise between $69.6 million and $80.4 million. The deal size could expand to $92.4 million if a 15% greenshoe option is fully exercised, allowing the company to issue an additional 803,548 primary shares.
The price range values LaShou at a 2013 enterprise value-to-revenue multiple of 1.28 to 1.46 times, which translates into a 65% to 69% discount versus Groupon, at its IPO price, and at a 40% to 50% discount to other Chinese internet-related companies, according to an industry source.
The price will be fixed on November 17. Barclays Capital, CICC and Jefferies are joint bookrunners of the deal.
Some Chinese issuers have drawn fire recently for poor accounting standards and weak corporate governance, including one of the biggest names in the online sector. Renren.com, a Chinese social-networking website similar to Facebook, raised $743 million ahead of its debut on the New York Stock Exchange in May, despite an accounting scandal and a high-profile resignation from its audit committee.