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On August 15, the China-based out-of-home advertising company issued 6.325 million additional shares on the NASDAQ at USD 16 apiece. The shares were sold out on the same day, bringing USD 101.2 million to the company, whose shares closed up 12% at USD 19.38 per share, thanks to the successful share offering.
The new shares were priced after the company's negotiations with investors, as an effort to ease the diluting effect of the issuance on the incomes of its existing shareholders.
Besides gaining short-term interests, VisionChina has brought in some of the world-level investment institutions as its shareholders, including Fidelity Management & Research Company, Oberweis Asset Management Inc. and Jetstream Capital, which are expected to operate long-term investments in the Chinese company, and help sustain its improvement.
VisionChina hopes that the fundraising would enhance the fluidity of its floating shares, as it promised to its shareholders. And the management believed that an increased fluidity would reinforce the attraction of a company to large- sized funds.
This round of financing coincided with the Beijing 2008 Olympic Games, which, inaugurated on August 8, are expected to boost every part of China's economy, not only now but most importantly, in a long period to come.
One of the beneficiary groups of the games would be Chinese out-of-home advertising companies. Their effort mainly shows on out-of-home TVs, many of which can offer live Olympic matches.
The Chinese, who have boundless love to their home country, take the games as the most important event in their lives. They care about the performance of their athletes, even when they are on buses, where they can enjoy the Olympics through out-of-home display screens, and at match intervals, watch some ads.
On the other hand, as many Chinese leave sedans for buses, due to increasing oil prices and high spending in parking, the number of bus passengers is going up in China, presently, enlarging the cake for out-of-home TV operators.
The value of these operators has been observed by many names, like McDonald's, Johnson & Johnson, Gome Electrical Appliances, China Life Insurance and China Mengniu Dairy, which have been regular customers.
In the second quarter of 2008, the Chinese out-of-home advertising market generated an overall revenue of CNY 1.6 billion, surging 69.6% from a year earlier, said Analysys International, a leading Chinese TMT market advisor, adding that the revenue from out-of-home ads on buses and subway accounted for 23.2% of the total.
From www.hexun.com, Page 1, Tuesday, August 19, 2008 info@SinoCast.com
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