China Shampoo Company Raises $214 Million In IPO, Retail Investor Orders Hit $9 Billion

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By Douglas A. McIntyre Updated Published

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A sign that the IPO market in Asia may be overheating is the case of BaWang International, which raised $214 million. The company makes shampoo, and the offering was oversubscribed by 400 times at the retail investor level. At the open, the firm’s shares will trade for 18 times earnings. The retail demand totalled $9 billion so most investors were turned away.

According to the AP, there has been a nine-month moratorium in IPOs in China.

The extraordinary IPO may not simply have to do with pent-up demand for new stock. China’s GDP is now expected to grow at 7% or better this year. Since exports are down, the Chinese government stimulus package, which is based on a $585 billion investment in the economy, may be helping to push up consumer spending among the country’s huge middle class. Part of the stimulus program is meant to give the middle class better access to credit.

Whatever the reasons for the demand for BaWang shares, earnings is not among them.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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