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about Asia Buzz  |  more Asia Buzz

Asia Buzz: Hot Property
An ex-banker turns a blowtorch on Techpacific.com, and turns heads
By ERIC ELLIS

April 13, 2000
Web posted at 3:30 p.m. Hong Kong time, 2:30 a.m. EST


One of the most keenly studied pieces of financial commentaries circulating Hong Kong this week hasn't been a prospectus, a column in a newspaper or magazine, or a stockbroker's advice on bear market strategies. It was, in fact, a devastating summary of how Hong Kong does business, produced in a flat in Happy Valley by a 34-year-old ex-investment banker who is fast developing a following as one of the sharpest financial analysts in Asia.

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His name is David Webb and his medium is the Internet, via his own website, appropriately addressed www.webb-site.com. Webb has been analyzing and distributing his sharp takes on Hong Kong companies for the past year or so. But few have had more impact than this week's effort on the upcoming float of Hong Kong Internet incubator Techpacific.com. Check it out.

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Titled "Try Not To Laugh," Webb dissects in brutal and compelling detail the proposed valuation of the year-old company as it attempts to float on Hong Kong's Growth Enterprise Market next week. We learn that despite a 25% fall in the bellwether NASDAQ in the last month, Techpacific's notional value has actually tripled during that time as the company issued discounted stock on favorable terms to employees, friends and family, much of which is eligible for sale on the first day of the listing--if it gets that far.

It's a solid piece of journalism, well-written, well-argued and a bit gossipy to boot. We also learn that a veritable Who's Who of Asian investment banking has their share of discounted Techpacific stock, and stand to gain massively when the company is floated at the price it wants. Indeed, we learn the precise shareholdings of these so-called "friends and family" of Techpacific's principals.

Webb calls it, ouch, "pyramid selling." It goes without saying that Webb's URL was gleefully e-mailed around the world so others could read it. I know of one company in Hong Kong that even convened a board meeting to discuss it. Webb's report was written when Techpacific.com was shooting for a price somewhere between $HK1.38 (17 cents) and $HK1.68 (21 cents) a share. Interestingly, two days after it was posted on the Net and while Techpacific's prospectus was landing on the desks of fund managers, the company decided to pare back that number to $HK1.05 (13 cents).

Now, with NASDAQ tanking again overnight by another 7%, the question is whether Techpacific will list at all. As Webb himself puts it, "I don't think authorities will have to worry about crowd control with this one." That's a reference to the mania seen just two months ago when Hong Kong investors went crazy for Tom.com, the undeveloped China portal play backed by tycoon Li Ka-shing. Webb savaged that too and in retrospect he was right to do so. Tom.com's shares have since flopped. Investors seem to agree with Webb about Techpacific. Details released today, just four days before its expected debut, show it has been subscribed by just 1.053 times. In Hong Kong terms, accustomed to oversubscriptions in the hundreds, that means it's a flop and that backers Banque Nationale de Paris Peregrine have much work to do if it gets to the GEM board.

Interestingly, Webb's remarks have been largely ignored by the traditional media. It's possible they have been embarrassed by Webb's sleuthing: that his analysis exposes that Hong Kong's media may not have the intellectual firepower to dissect companies like Webb can. Of course it's easier for Webb: he's rich, having made millions as an investment banker during the '90s, so he can indulge his personal passions, such as his chairmanship of the Hong Kong chapter of Mensa. He now invests some of that pile and says his website analyses articulately the processes he undertakes when considering investments on his personal account.

Webb's raison d'etre is a simple one: he would like to see more transparency applied to corporate Hong Kong and for it to become less of a casino and more of a level playing field for investors. Webb also captures the essence of the Web in his reports. He says a number of German technology investment clubs are among the more vigorous adherents to his site. Webb-site.com doesn't make money--Webb says he gets about $20 a month in book sale commissions from the Amazon.com banner. But that's not why he hosts and writes webb-site.com. "I pursue these ideals because I hold them," he says. Holier than thou? The people at Techpacific.com might beg to differ.

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