FEBRUARY 7, 2000 VOL. 155 NO. 5
It took two and a half months to prepare the financial and legal requirements for the listing. Cheng and his team had envisioned a grander debut: they wanted to be on NASDAQ. But a plea from gem's chairman persuaded them to list locally. "Sophisticated technology companies like ours are better understood in the U.S.," says Cheng. "But gem needed a local hero and we were it."
Timeless had earlier secured $13 million in capital from Taipei-based "angel" investor Crimson Asia Capital. The IPO raised an additional $58 million. After an ebullient first day of trading, Timeless' shares closed at 69.4 cents, 80% above the initial offering price. The global technology share boom had officially arrived in Hong Kong.
The weeks since the listing have been stormy. In a swift year-end deal, Cheung Kong Holdings, Li's flagship, paid $5 million for a 2% stake in Timeless; in turn, Timeless agreed to invest $23 million in new offices in The Center, a top-drawer Cheung Kong development. In the old economy, a deal with one of Asia's richest men would have marked one's arrival among the local business élite. But to many punters, Timeless suddenly looked less like a go-go technology firm than an old-fashioned real estate play. "Is it a software systems integrator or a property investor?" asks Internet analyst David Webb, publisher of Webb-site.com. Webb says the office-space purchase represents 40% of the IPO proceeds and violates Timeless' prospectus, which pledges to allocate funds raised to working capital. Cheng, for his part, defends the deal. "This is good news," he says. "Cheung Kong wanted a technology company to boost the value of the group in terms of Internet and e-commerce. We get office space that's 50% bigger, with air-conditioning that runs 24 hours and showers built in." Still, the market needs convincing. Timeless' shares are still 33% off their Nov. 25 peak of 99 cents.
Cheng is projecting a $2.6 million profit for the fiscal year ending March 31, after cumulative losses of $7.7 million in its first three years. Eventually he plans to achieve the NASDAQ listing he has long sought. To accomplish that, however, Cheng will have to show business successes to U.S. investors--not just a prestigious office address and well-showered programmers.
Reported by Wendy Kan/Hong Kong
First, Create the Hot Start-up
Then Pray for The Angel
Next, Call in The Venture Capitalist
Cozy Up with The Incubator
Now You Are Ready for The Listing
Or, You Can Just Sell Out
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