Smart Share Global Ends IPO Day in Green But Troubles Loom

The Chinese company lifted off on Thursday in a downsized IPO and ended barely above the issue price. Now, it still has some obstacles to overcome.
Anna VodApr 02,2021,17:30

The short trading week ended well for China’s largest power bank sharing company, Smart Share Global Ltd. (Nasdaq: EM), which closed its debut day in green territory Thursday, even if just 4 cents above issue price.

The operator of Energy Monster, whose ownership disputes crossed the border along with its IPO plans, raised $150 million by selling 17.7 million American depositary shares at $8.50 apiece. The pricing was below the expected range of $10.50 and $12.50 each.

Earlier, Smart Share Global expected to raise about $300 million, according to Reuters. However, recent market volatility, high tensions between Beijing and Washington and the looming enforcement of the Holding Foreign Companies Accountable Act, as well as the dragging lawsuit with two Shanghai venture capitalists, has weighed on the pricing.

Underwriters were Goldman Sachs (Asia) LLC, Citigroup Global Markets Inc., China Renaissance Securities (Hong Kong) Ltd., and BOCI Asia Ltd.

Backed by Alibaba Group, Softbank, Xiaomi Corp., and Hillhouse Capital, Smart Share said it was the largest mobile device charging provider in China in terms of revenue in 2020. Last year, it booked $430.6 million in revenue on income of $11.6 million.

Smart Share said in its prospectus that the capital will fund expansion to new locations, hiring new talent, new power banks and cabinets, and potential acquisitions.

Just a few weeks back, Smart Share Global could have enjoyed a luckier IPO. A slew of Chinese companies debuted with fanfare on New York exchanges in the first few months of 2021, including some big IPOs. Zhihu (NYSE: ZH), China's largest Q&A platform, raised $523 million a week ago, priced at $9.50 a share, and has mostly stayed below its issue level, having closed Thursday at $8.99 per share. Another Chinese giant, e-cigarette maker RLX Technology Inc. (NYSE: RLX), raised $1.4 billion in late January and since slid from trading near $30 per share to $10.95 on Thursday, also hit by the changing regulatory environment.

Chinese stocks tumbled last week, some losing billions in market valuations, after the U.S. Securities and Exchange Commission adopted the Act, earlier signed by former President Donald Trump, that may force the delisting of foreign companies should they refuse opening their books to U.S. auditing.

Topics:smart share, energy monster, China, IPO, EM