There are reports coming out now that the VIPshop.com IPO is going to be pulled, due to lack of interest from investors. This move will hardly be surprising for people who have followed the reception of the F-1 filing and the roadshow.
A more important question is what this means for Chinese IPOs as a whole. Has the window just been slammed shut on Chinese IPOs, or is this more of an isolated incident? To me at least it looks a lot more like the latter.
The company did not look like a tempting proposition in almost any respect, and there were a few red flags to go along with it, so I don’t think we can use this as a good temperature gauge for better-looking Chinese IPOs. I suspect AdChina, and possibly Cloudary, might be the IPOs used to judge the market appetite for more Chinese listings in the near future.
A couple of quick comments on why I don’t think VIPshop.com was an attractive offering to begin with might be in order, in case you haven’t read the filings.
The company was losing money at an increasing pace, and it was hard to see how the company was going to turn it around. The business model was also very “heavy”, by which I mean the company had a very long supply chain (warehousing, sales, after sales services, distribution etc.) and was probably taking on too much.
To top this off they had a VIE contract that must be an absolute nightmare for anyone working with transfer pricing issues, leaving the company open to very large tax liabilities indeed.
All in all, I’d wait for the AdChina IPO reception before I start declaring the IPO window for Chinese companies is definitely closed.