China's Vipshop makes weak NYSE debut

Stock Market Predictions

(Global Markets) - Shares of Chinese online retailer Vipshop Holdings (VIPS.N) fell as much as 12 percent in their New York market debut as even a sharp cut in the offer price failed to overcome concerns about mounting losses and a complicated corporate structure.

Guangzhou-based Vipshop, the first Chinese company to go public in the United States since last August, priced its offering at $6.50 per share, below its indicated range of between $8.50 and $10.50 per share.

Earlier this week, the company told the U.S. Securities and Exchange Commission that some of its existing shareholders, including entities affiliated with venture fund Sequoia Capital, had agreed to buy $20 million of ADSs in the offering -- normally a positive sign -- but investors remained cautious.

Though it operates in the booming Chinese consumer space, Vipshop hasn't posted a profit since 2009. Its losses for 2011 widened despite a jump in revenue.

Vipshop's corporate structure is also a cause of concern. Known as a variable interest entity, or VIE, the structure lets Chinese companies bend certain rules forbidding foreign investment.

Last year, Global Markets reported that the China Securities Regulatory Commission authored a request to the State Council, the government's equivalent of a cabinet, asking it to take action against the VIE structure.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

IPO VIEW-Waters still murky for U.S.-listed Chinese IPOs

GRAPHIC on VIE structure: link.reuters.com/byk83s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Vipshop's IPO was seen as an indicator for other Chinese issuers hoping to tap U.S. markets. Four other Chinese companies have filed to go public in recent weeks, including AdChina, China Auto Rental, Cloudary Corp and Newsummit Biopharma Holdings.

Vipshop, which raised $71.5 million through the IPO, offers over 1,900 branded products to consumers in China through flash sales on its vipshop.com website.

Flash sales represent a new online retail format, combining the advantages of e-commerce and discount sales through selling a limited quantity of discounted products or services, for a fixed period of time.

Goldman Sachs and Deutsche Bank Securities were the joint book-running managers for the offering.

Units of Whiting USA Trust II (WHZ.N) rose more than 23 percent on their first day of trading on the New York Stock Exchange, a day after the company's IPO was priced at the midpoint of the expected price range.

The trust was formed in December by Whiting Petroleum Corp (WLL.N) to own a non-operating stake in certain producing properties in the Rocky Mountains, Permian Basin, Gulf Coast and Mid-Continent regions of the United States.

Vipshop's ADSs closed at $5.50 on the New York Stock Exchange, down 15 percent from their IPO price. (Reporting by Jochelle Mendonca and Ashutosh Pandey in Bangalore; Editing by Sreejiraj Eluvangal and Gopakumar Warrier)