Wanda Sports Group Co. debuted on the NASDAQ on Friday July 26, and was subsequently pummeled by investors, falling 36% from its opening IPO price. Trading under the ticker” “WSG”, the ADSs priced at $8, opened at $6 and finished the day at a mere $5.16, resulting in a market valuation of $705 million.
Raising a total of only $190 million, the IPO was a disappointment given the firm’s previous aspirations to raise up to $500 million. The original plan had been to sell as many as 33.33 million shares in the price range of $12-$15 before revising targets to 28 million shares between $9 and $11.
As the second worst IPO of the year, Wanda Sports Group joins 11 of 18 Chinese IPOs this year that are trading below their debut price.
CEO Hengming Yang said in an interview with CNBC that the money raised will be used to pay existing debts and will bring the company to a very healthy leverage ratio, the rest will be used to finance the company’s future growth. In addition to citing concerns about capital market conditions, Yang answered a question on the company’s decision to list in the U.S. as opposed to the HKEX or even the STAR by saying, “Although we have a Chinese ownership we are actually a global platform. We are a global sports event marketing media company well established in North America with our headquarters in Tampa Bay, USA.” When pushed on considering Shanghai’s answer to the NASDAQ, the STAR, Yang reiterated the company’s commitment to the NASDAQ and its global status, refusing to realistically consider the STAR as an option.
CEO Hengming Yang was also asked about E-sports and Wanda Sports’ potential in this area, he commented, “Certainly E-sports is a part of our growth strategy, and we look at E-sports seriously, we think there is potential opportunity there.”
When asked to comment on trade tensions between the USA and China combined with unfavorable capital market conditions for Chinese IPOs, Yang resorted to repeating that the company has a strong growth strategy and is confident of delivering long term growth to shareholders. Following Friday’s lackluster debut, the company will have its work cut out for it as it looks to rejuvenate its stock price.