UPDATE 3-China's Nobao scraps IPO plans for 2nd time

Fri May 27, 2011 11:21am EDT

* Cites "general market conditions"

* Had plans to raise about $300 million (Adds analyst comments and links to Special Report, Factbox)

By Aditi Sharma

BANGALORE, May 27 (Reuters) - China's Nobao Renewable Energy Holdings Ltd shelved its plans to list on the New York Stock Exchange for the second time in as many years, the latest victim of investor fatigue triggered by the wave of Chinese companies flocking to U.S. exchanges.

In its filing with the U.S. Securities and Exchange Commission on Friday, the company cited "general market conditions" as a reason for the withdrawal.

David Menlow, president of IPOfinancial.com, said blaming market conditions was a convenient cover for companies pulling their IPOs.

"It's a way of not taking up the ultimate responsibility that the deal just was not in demand," Menlow added.

He also said Nobao's overall financials were not inspiring confidence among investors and the company's "China connection was not helping" either.

Chinese companies face transparency issues as they undergo less scrutiny before being allowed to list on a U.S. exchange.

Listings of Chinese companies made up a quarter of U.S. initial public offerings last year. But more listed Chinese companies are being accused of fraud, which could drag down the reputations of the stock exchanges that list them. [ID:nN22286378]

Earlier this month, Nobao had filed a preliminary prospectus with the U.S. Securities and Exchange Commission to raise about $300 million from this IPO, which was expected to price on Thursday after the close of U.S. markets.

However, an underwriter had told Reuters that the company would postpone its IPO indefinitely. [ID:nWEN3735]

Nobao had previously filed for the same-sized IPO in April 2010 and later trimmed back the size to $180 million. Nobao eventually scrapped the plan to go public in June 2010 amid high market volatility caused by the debt crisis in Europe.

The Shanghai-based company mostly works on commercial buildings, installing special modules that use energy stored underground to heat and cool the buildings and heat water.

Private equity firm Silver Lake had already invested $12.5 million in the company and has options to invest another $97.5 million later, according to Nobao's filing with the SEC in May. (Reporting by Aditi Sharma and Vidya L Nathan in Bangalore; Editing by Maju Samuel)

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