There was a fall of 10 percent – the daily limit for a company, on its debut in Shanghai, in the share of Qihoo 360 Technology. this is a company that was listed in New York earlier and had moved back into China through a back-door listing.
The US$62 billion market capitalization of the company on its return to the Chinese stock market marked a seven-fold increase in comparison to its market capitalization while it was listed in the U.S.
In June 2016, the company had delisted itself form the New York Stock Exchange and chose a back door entry for listing in Shanghai with the help of Top of Form lift maker SJEC – also listed in Shanghai.
Qihoo 360 is an internet security company and the largest in the industry in China.
With a deal valuation of 50.41 billion yuan (US$7.96 billion), Qihoo 360 was put at was purchased by SJEC through an asset swap and cash injection. “360 Security Technology” was the name given to the SJEC stocks when the company resumed trading.
Qihoo 360 had a market cap of US$9 billion in the US stock market when it got itself delisted and clocked a market cap of 385 billion yuan (US$62 billion) in its China listing. The company is now considered to be the most valuable software share in the A-share market.
“Qihoo 360 is one of the first Chinese internet companies returning home from the US market. But I think this is just the beginning,” Zhou Hongyi, founder and chairman of Qihoo 360, said.
He said that the company was undervalued in the U.S.
“We hope to find support from the local capital market,” Zhou said on Wednesday. “We also expect more Chinese internet companies to come back, grow in the home market and share their growth with home investors.”
Zhou believes that the Chinese economy is now in a new age since it is the second-largest in the world. He however added that the market required a similarly large capital market.
“Qihoo 360 is one of the first Chinese internet companies returning home from the US market. But I think this is just the beginning”, he said.
With multiple streams including artificial intelligence, big data and blockchain, the Chinese internet technology sector is in a boom and 360 Security Technology hopes to ride that boom, he said.
The company was listed at the NYSE in 2011 after having been founded in 2005 and in 2014, it had a market value of over US$14 billion.
But since then there has been concerns among U.S. investors about disclosures and accounting and auditing in Chinese companies which resulted in a steady correction in the share value of the company in the U.S.
Oihoo 360 went private in 2015 and delisted from the NYSE at a time when a number of Chinese internet companies were taking the same strategy. The list included the likes of Shanda Games and Baofeng Group.
(Adapted from SCMP.com)