China’s version of Craigslist, 58.com Inc. (NYSE: WUBA), sold 6 million American Depositary Shares (ADSs) Friday morning at a price of $38.00 apiece. The company is selling 2 million shares and selling shareholders are selling the rest. Selling shareholders have also granted the offering’s underwriters a 30-day option on an additional 900,000 shares.
Shares hit a post-IPO high on March 7 and have been slipping ever since. When the company announced the secondary offering on March 24, shares were trading at more than $46.00. The offering price is a 17% discount to the earlier price and a discount of nearly 36% to the post-IPO high.
The company has adopted a dual-class share structure, and there will be about 43 million Class A shares and 124 million Class B shares outstanding after the IPO. Class B shares get 10 votes per share and will represent about 96.6% of the voting power among 58.com’s shareholders. Class B shares are converted to Class A shares before they can be sold. Each ADS represents two Class A ordinary shares.
Company executives and directors owned 128 million Class B shares before this secondary offering. After the offering, 58.com directors and executives will own about 111 million Class B shares, or 86.9% of the voting power in the company. The board waived the lock-up restriction on the sale of the company’s stock so that current director Dong Yang could sell about 250,000 shares in the secondary offering.
The company’s unique position among China’s Internet stocks is likely the reason that share prices have not been sunk by this stock sale. Shares opened Friday at $37.48 but quickly gained upward momentum. They were nearly 4% higher in late morning trading, at $40.75 in a 52-week range of $21.15 to $58.89.