May 11, 2011 / 5:33 PM / 8 years ago

Jiayuan.com debut caught in Chinese IPO fatigue

NEW YORK (Reuters) - American depositary shares of Chinese dating website Jiayuan.com International Ltd DATE.O, fell in their Nasdaq debut on Wednesday in the latest sign of investor fatigue with a wave of Chinese companies flocking to U.S. exchanges.

The shares finished their first day of trading at $10.52, 4.4 percent below the initial public offering price, even though Jiayuan.com’s $78 million offering priced at the midpoint of the proposed price range.

“I believe that is a statement on the Chinese market,” said David Menlow, president of IPOfinancial.com.

Chinese offerings have been grabbing headlines in the past months as a dozen Chinese companies — mostly Internet ventures — rushed to list in New York since the start of the year.

In the fervor around Chinese stocks, Renren Inc (RENN.N) attracted the most attention. One of China’s largest social networking sites, it stormed the U.S. market earlier this month with an IPO that raised $855 million and had a 29 percent share jump on the first day of trading.

But then Renren started falling and fell every day.

“It was almost like Renren was the tipping point,” said Morningstar analyst Bill Buhr.

The first Chinese IPO to follow Renren, mobile security company NetQin Mobile Inc NQ.N, has tumbled 30 percent below its IPO price despite raising a more-than-expected $89 million in its offering on May 5.

And then came Jiayuan.com, edging up slightly as the market opened on Wednesday, before sliding down as low as $9.76.

“It may be the first signal that the Chinese IPO wave may be in some trouble,” Buhr said.

Beijing-based Jiayuan.com and one of its shareholders sold 7.1 million ADSs for $11 each after planning to sell them at $10 to $12 apiece. The largest online dating platform in China, Jiayuan.com charges users to exchange the first message and was founded by Haiyan Gong in 2003 in her dorm room.

“Our market has such huge potential, with 200 million singles potentially needing our service,” said Gong, who met her husband on Jiayuan.com in 2004, speaking through the company’s chief financial officer who acted as a translator.

Investors had clamored to buy into the Chinese Internet companies, looking at a future when more and more Chinese would plug into the online world.

But on Wednesday, those prospects were slightly shaken by weaker-than-expected economic reports out of China, with inflation remaining above 5 percent, that put a damper on dreams of unconstrained booming growth.

Chinese stocks have also been plagued by concerns about accounting issues and fears of China’s strict regulations.

“The problem with Renren is it was the first social networking stock to go public and a lot of retail investors bought it without doing their research and now the continued fall has triggered a sell-off,” said IPOdesktop analyst Francis Gaskins.

“There was a time that Chinese stocks were hot but then bankers have priced them at a very high multiple and, except for Jiayuan.com, they haven’t had very good sequential growth in prior quarters,” he said.

Jiayuan.com started making a profit in 2009, but continues to operate at a loss on the per-share basis. It reported revenue of $25 million in 2010, with a net loss of 5 cents per share attributable to ordinary shareholders.

Bank of America Merrill Lynch and Citigroup led underwriters on Jiayuan.com’s IPO.

Additional reporting by Himank Sharma in Bangalore; Editing by Maureen Bavdek and Tim Dobbyn

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