Another large Chinese IPO lines up in US after Luckin Coffee scandal

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NEW YORK – Dada Nexus Ltd, an operator of crowd-sourced delivery platforms in China backed by JD.Com, has filed for what could be the second large US initial public offering by a firm since an accounting at cast a shadow over such deals.

The listing could raise about US$500 million (S$709 million), people familiar with the matter said, making it one of the bigger US IPOs by a Chinese company this year. Dada Nexus operates the JD-Daojia and Dada Now retail and delivery platforms which connect fleets of motorbike delivery staff with merchants in hundreds of Chinese towns and cities.

The filing comes a week after Kingsoft Cloud Holdings raised US$510 million in the largest US listing by a Chinese company this year. It was the first major trading debut since Luckin Coffee, once a poster child for Chinese start-ups, was accused of accounting fraud and saw its shares tumble 74 per cent from its price when trading of its stock was suspended in April. Kingsoft Cloud shares have climbed 43 per cent from the offer price, a rare mark of success for an asset class that has been marred by sinking share prices over the past year.

In the latest twist in the Luckin Coffee scandal, the coffee chain fired its CEO and another top executive on Wednesday (May 13), a sign of the increasing turmoil at the former success story that until a few months ago had been one of last year’s most high-profile and best performing Chinese IPOs in the US

The success of Kingsoft Cloud, however, showed the US market is still receptive to Chinese companies even as the two countries clash on the origin of the coronavirus pandemic that has killed more than 291,000 people and infected over 4.2 million.

This year 12 Chinese firms have listed in the US and all but two are trading below their offer prices, data compiled by Bloomberg show. Of the 45 companies that have completed US IPOs since the beginning of 2019, just eight are above water, the data show. They have declined 11.6 per cent on average, weighted by deal size, whereas US listings in general have risen by an average 19 per cent.

Details of Dada Nexus’ offering such as size could still change, the people said, asking not to be identified as the information is not public. A spokesman with Dada declined to comment.

Goldman Sachs Group, Bank of America and Jefferies are leading Dada’s IPO, according to a filing with the US Securities and Exchange Commission.

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