Chinese Equity Fund Manager Cornerstone Seeks $20 Million IPO in New York

Cornerstone Management expects to trade its shares under the ticker “CSCA” on the Nasdaq Capital Market.

Anna Vodopyanova
    Oct 31, 2018 10:52 AM  PT
Chinese Equity Fund Manager Cornerstone Seeks $20 Million IPO in New York
author: Anna Vodopyanova   

A Guangzhou equity fund manager, Cornerstone Management Inc., is seeking to raise up to $20 million on Wall Street by selling 5 million of its ordinary shares.

Cornerstone Management, which invests primarily in the technology, media, and telecom (TMT) sectors,focuses on companies that are either publicly traded or are looking to go public in the U.S. The management company funds operations in the pre-IPO, IPO subscriptions, post-IPO, and privatization stages while providing analyses of target investments to its clients, as well as financial advisory services.

The majority of Cornerstone's revenue comes from fund management services, according to its filing with the U.S. Securities and Exchange Commission. It had revenue of $22.6 million in the second quarter compared with $12.8 million in revenue posted for 12 months ended March 31. It had net income of $10.2 million for the three months ended in June compared with $2.9 million for the previous year.

Citing research by China Insights Consultancy (CIC), the company said that China's private equity industry has experienced significant growth since 2015. In 2016, as China tightened regulations over the industry, the number of private equity firms declined when many of them lost qualifications. However, the level of assets under management (AUM) in China continued to grow, reaching $1.7 trillion last December.

Cornerstone said it raised $16.1 million in the second quarter this year and $366.5 million during the 12 months through March. In its amended prospectus filed yesterday, Cornerstone also mentioned launching two new funds in August, raising capital of $59.1 million.

The company said it would use the proceeds of its IPO to expand its operations and for general corporate purposes, including increasing its marketing and sales team. In addition, $500,000 of the proceeds would fund an escrow account to indemnify the underwriters. Its clients include several major institutional investors in China, as well individuals with an annual income above $75,000, according to the company's most recent filing.

Underwriting the Chinese company's New York offering is ViewTrade Securities Inc. Cornerstone expects to trade its stock under the ticker "CSCA" on the Nasdaq Capital Market.