US tech titans are sitting on at least $60 billion (Dh220.3bn) of untapped paper wealth, choosing to stay private for longer. Their counterparts in China are taking a different path, rushing to the public markets to cash in.
Five initial public offerings have helped at least 16 tech bigwigs ring up a combined $48bn of net worth at the time of the IPOs, according to data compiled by the Bloomberg Billionaires Index. Half of them are co-founders of Xiaomi, with shares of the smartphone maker valued at $26.5bn on its July 9 debut. Pinduoduo chief executive Colin Huang was worth $9.9bn two weeks later, when the e-commerce platform went public in the US at $19 a share.
China’s unicorns - private companies valued at more than $1bn - “are more opportunistic” when it comes to timing their IPOs, said Kevin Diao, CEO of Meixin Global, an online asset-management platform that offers unicorn investment products. “If they achieved better financial performance at the end of 2017, they’ll seek an offering this year because they’re not sure whether their growth can sustain and support the valuation.”
Xiaomi’s 2017 revenue, for example, surged 67 per cent from a year earlier after posting annual growth of just 2.4 per cent in 2016. Revenue at Meituan Dianping, another e-commerce platform that’s set to go public this week, climbed 161 per cent last year after more than tripling in 2016.
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The rapid creation of wealth is taking place even as other tycoons are seeing declines in their fortunes. Twelve Chinese tech billionaires on the Bloomberg index have collectively lost $12.1bn this year as of Sept. 18, led by Netease’s William Ding, who’s down almost $8.5 billion as shares of the game developer have plunged. The MSCI AC Asia Information Technology Index dropped 11 per cent in 2018.
Silicon Valley has had fewer unicorn IPOs this year, even as valuations for firms such as Uber have soared.
Staying private can keep companies focused on the long term, and avoid wild swings in value caused by changes in the stock market. But it doesn’t guarantee a higher valuation each round. Palantir Technologies was valued at $20bn in a 2015 funding round but Morgan Stanley mutual funds have cut the valuation several times over the past two years. The funds’ June 30 valuation implies the data miner was worth just $4.4bn, meaning Palantir’s co-founders would only have a combined stake of $1.76bn.
Selling shares in an IPO doesn’t guarantee instant riches on both sides of the world. The Hong Kong Stock Exchange and the US Securities and Exchange Commission both require a minimum lock-up period of 180 days, and 36 months if listing in mainland China.
The “lucky rich” from China also have to maintain their wealth amid the threat of a potential trade war and the dangers from its shadow banking system.
Chinese authorities have recently tried to reduce financial risk with a rule change allowing wealth management products (WMPs) to invest directly in the stock market. The effort is focused on reducing the size of the nation’s shadow-banking system.
WMPs, asset management products offered by banks that promise yields higher than deposits, have been a driver in the growth of off-balance-sheet lending.
Commercial banks can now open accounts to invest their WMP assets straight into all “sanctioned” financial products, China Securities Depository and Clearing said in a statement on Wednesday. The rules are due to take effect at the end of 2020.
Meanwhile, Meituan’s IPO timing will be a test of investor confidence. Meixin’s Mr Diao said his company participated in subscribing Meituan existing shares in March through the secondary market before it filed for the IPO, and the HK$69 (Dh32) price per share is 20 per cent higher than he expected amid the recent volatile market. He said his clients are satisfied with the return but concerned the offering price is too high to follow up and subscribe, so they decided to just wait and see the market reaction.
“September is a key time for the IPO market as NIO and Meituan debut,” Mr Diao said. “If they perform well, the market won’t be too pessimistic, but if they don’t look good, investors’ enthusiasm will turn cold.”
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
The Kingfisher Secret
Anonymous, Penguin Books
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
UAE currency: the story behind the money in your pockets
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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World Cricket League Division 2
In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.
UAE fixtures
Thursday February 8, v Kenya; Friday February 9, v Canada; Sunday February 11, v Nepal; Monday February 12, v Oman; Wednesday February 14, v Namibia; Thursday February 15, final
MO
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