Initial Public Offerings or IPOs are the means by which a private business organization can raise additional capital it needs by offering the public an equity interest in the company. It allows the company to transform its character from private to that of a public company. In the case of an IPO, private companies often seek to create an impact so other huge companies would take interest and perhaps purchase bulk shares. By making a huge splash in the stock market pool, its needed capitalization can easily be achieved. A leading example is the case of Chinese technology companies with most of them seeking to become the world’s biggest IPO to date.
Technology Companies Intertwine
In the world of digital technology, the name of the game has always been innovation. Whoever gets there first wins the prize. Needless to say, the competition among technology companies is tough and full of secrets. Who wants to reveal the next big thing in technology anyway? It is therefore not surprising to see huge tech companies like China Tower wooing equally big companies that somewhat relates to its industry though not considered as a competitor. In the case of the telecom towers operator, among the cornerstone investors that it has successfully courted is Alibaba. The e-commerce giant, considering that it is also into digital technology, has expressed interest in buying bulk shares from China Tower.
Commercial Banks and Technology
Technology plays a vital role in the banking industry. It allows banks to receive and make payment online, query other banks as to the status of a deposit, get and process inquiries from clients, and many more. Aside from the fact that banks would gain additional revenues if their gamble on an IPO pays off, it is also possible they would wish to avail of what new tech companies have to offer in terms of technology. This is perhaps the reason why the Industrial and Commercial Bank of China (ICBC), recognized as the largest bank in China, has also placed its bet by seeking to purchase bulk sales of China Tower.
Stock Market Players Are In It Too
Venture capitalists like Hillhouse Capital Group, are also putting their money on the table so they could be part of the action when the IPO is introduced. Though venture capitalists and technology companies like China Tower may seem to have nothing in common, their interests intertwine when the question is about raising additional capital. As an investment management company, their primary target is to get a bigger slice of the revenue pie. This is why Hillhouse is currently the largest investor among other big investors in China Tower. The investment company has committed to purchase worth US$400 million shares of stock.
The release of the China Tower this month has proved to be very exciting for many because of the great many disclosures that the company released to stock market authorities.
While it is true that the market response may not be aggressive and strong enough, considering that the Yuan weakened and unfavorable macro environment hounded it for a long time. Nevertheless, its business of renting out towers to telecom companies can easily disregard such handicap.