Tue, Jul 10, 2018 - Page 12 News List

HK ‘unicorn’ funds miss target at debut

COLD FEET:Six funds raised just one-third of their goal as investors showed reduced appetite for tech IPOs and distrust toward projects led by the Chinese government

Reuters, SHANGHAI

Once marketed with great fanfare as an “epoch-making gala for investors,” six Chinese “unicorn” funds quietly began operations yesterday — alongside Xiaomi Corp’s (小米) lackluster Hong Kong initial public offering (IPO) — after raising just one-third of their original targets.

The six funds, launched to support mainland listings of home-grown tech firms, such as Xiaomi and Alibaba Group Holding Ltd (阿里巴巴), originally sought to raise 300 billion yuan (US$45.33 billion) from retail and institutional investors.

However, they ended up with only 104.9 billion yuan among them, according to statements published over the weekend, despite a massive marketing effort orchestrated by Chinese regulators.

The shortfall reflects reduced appetite for tech IPOs in a market roiled by trade war fears. Investors are also showing some distrust toward funding projects orchestrated by the Chinese government.

The funds were promoted as a special opportunity for mom-and-pop investors, who were allowed for the first time to participate in tech IPOs as cornerstone investors along with institutions.

China Southern Fund Management (南方基金管理), China Merchants Fund (招商基金管理) and E Fund (易方達) declined to comment. The other three funds, China AMC (華夏基金), Harvest (嘉實) and China Universal (匯添富), could not immediately be reached for comment.

Some investors have drawn parallels between the unicorn funds and China’s first outbound “Qualified Domestic Institutional Investor” funds promoted by the government 11 years ago. Those funds burned investors after global markets collapsed during the 2008-to-2009 financial crisis.

“The smell is very similar,” Beijing Heju Investment (北京和聚投資) strategist Huang Tao (黃弢) wrote, adding that in both eras, valuations of overseas tech firms were near historic levels and were surrounded by hype.

“I believe history will repeat itself,” Huang said.

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