Mi­cro­fi­nance busi­ness sees IPO as driver

China Daily (Canada) - - ACROSSAMERICA - By JACK FREIFELDER in New York jack­freifelder@chi­nadai­lyusa. com

More than four months ago, China Com­mer­cial Credit, Inc (CCC) be­came China’s first US ex­change-listed mi­cro­fi­nance com­pany.

“One of the rea­sons for go­ing pub­lic was the sus­tain­able and long-term de­vel­op­ment of the com­pany,” CEO Qin Huichun told China Daily on Tues­day in an in­ter­view. “If we can ac­quire for­eign banks, we can in­tro­duce them to free­trade zones in China. It’s only a mat­ter of time.”

CCC, founded in 2008, is a mi­cro­cre­dit com­pany that pro­vides busi­ness loans and other loan ser­vices to more than 350 small-to-medium busi­nesses, farm­ers and in­di­vid­u­als based in Wu­jiang, Jiangsu prov­ince.

The com­pany raised $9 mil­lion in its Aug 13 ini­tial pub­lic of­fer­ing on NAS­DAQ by sell­ing 1.4 mil­lion shares at $6.50 per share. On Fri­day, the stock (listed as CCCR) closed at $8.09.

“The rev­enue scale will be de­ter­mined by the project sources we pro­vide,” said Qin. “I think we can tar­get to pro­vide $33 mil­lion to $49 mil­lion (200-300 mil­lion yuan) projects, which will gen­er­ate in­come of $1.3 mil­lion to $2.4 mil­lion (8 to 15 mil­lion yuan).”

Jeff Papp, a se­nior an­a­lyst at Ober­weis Funds — an in­de­pen­dent in­vest­ment-man­age­ment firm in Mil­wau­kee — noted the im­por­tance of brand recog­ni­tion for any Chi­nese com­pany list­ing abroad.

“The brand­ing method is very pow­er­ful within their lo­cal mar­kets,” Papp told China Daily. “We’ve seen com­pa­nies that have listed here with tra­di­tional IPOs on the NAS­DAQ, and they go back and pub­li­cize within China with the hope of get­ting some con­sumer re­sponse.”

“The cap­i­tal mar­kets

in the East have been closed for some time, so there’s a long queue to list,” Papp said. “That leads to the US mar­kets where, over time, there have been far more av­enues to list even with a non­tra­di­tional IPO.”

Josef Schus­ter — founder of Ipox Schus­ter LLC, an in­de­pen­dent fi­nan­cial-ser­vices firm in Chicago — sees CCC’s IPO as a prag­matic one.

“Chi­nese IPOs come here, es­pe­cially in the tech­nol­ogy center, be­cause there is a de­mand,” Schus­ter said. “That’s kind of the goal of al­most ev­ery Chi­nese en­tre­pre­neur, to seek a list­ing abroad and in the United States. The ven­ture cap­i­tal back­ing makes the US a nat­u­ral choice for them, much more than the do­mes­tic mar­ket.”

Papp said one of the “broad is­sues’’ for CCC to over­come is that “lend­ing in a place like China is viewed as very risky.”

Schus­ter said he sees the prospects for CCC’s growth but also cau­tioned about list­ing in the US.

“While the list­ing in the US brings ben­e­fits, it also brings scru­tiny,” Schus­ter said. “For the com­pany it­self, there is an ini­tial ben­e­fit for brand­ing. I think it was a good de­ci­sion for it.” Wan Li con­trib­uted to this story.

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