Upbeat Mood in Shanghai I

I am still fighting jetlag days after arriving in Shanghai for the International PIPEs conference, which ended yesterday. One attendee told me he read that the most overused phrase is “takeaway,” so I will not use that phrase. Instead here are some things I learned, as always in no particular order.

* Thanks first to those of you who told me you enjoy reading my humble blog on a regular basis. Traffic has been increasing lately, which also says to me maybe things are beginning to look up.

* PIPE investors facing the need for greater patience for liquidity are asking to be “paid to wait,” including more debt transactions, and greater collateralization. There was a discussion ab0ut how difficult that can be with a Chinese company, as it seems difficult to get a lien on anything other than the equity ownership of the company.

* A speaker talking about China noted that today’s economic crisis gives China an opportunity to pursue “long overdue adjustments to our economic model.” They would like to be less dependent on exports, for example, which last year represented over 40% of China’s GDP.

* One questioner suggested that GDP numbers from China may not always be reliable. The speaker noted, I think correctly, that what really matters is the earnings growth of Chinese companies that one is looking at investing in.

* More reverse mergers of PRC companies are taking place without contemporaneous financings either because companies are more interested in liquidity than raising capital, or evoking a strategy to log a few quarters as a public reporting company before raising money.

* Valuations of Chinese companies trading in the US have come back to earth a bit, and that is causing some Chinese companies considering going public here to pause and delay some possible deals.

More to come…….

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