* People.cn shares close 74 pct above IPO price
* Shares trigger multiple stock exchange circuit breakers
* Long way to go to compete effectively with new media firms
(Adds quotes, closing share price)
By Melanie Lee
SHANGHAI, April 27 China's People.cn Co Ltd
finished 74 percent higher on its first day of
trading in Shanghai after a $219 million IPO as investors
flocked to the state-backed news portal, giving it a bigger
market value than the New York Times.
Demand for People.cn shares were so high that the stock was
suspended for most of the afternoon, after triggering multiple
stock exchange circuit breakers.
"Investors are scrambling for People.cn due to its scarcity.
As long as you're a Chinese person, you would know the company,"
said Liu Guanwu, a media IPO analyst with Beijing-based
consultancy Analysys International.
At its Friday closing price of 34.72 yuan, 73.6 percent
higher than the initial public offering price of 20 yuan,
People.cn was worth 9.6 billion yuan ($1.5 billion), more than
New York Times, which has a market capitalization of $951
The stock opened at 31.01 yuan and was temporarily suspended
when it triggered a stock exchange circuit breaker after rising
10 percent from its opening price. It was suspended again till
the last five minutes of the trading day, after triggering
another stock exchange circuit breaker when more than 80 percent
of the stock changed hands.
"Institutional investors I have spoken to seem rather
interested in this stock primarily because it's a government
entity," said Chen Yi, an equity analyst with Xiangcai
Securities in Shanghai.
"From the look of things, retail investors seem to have also
followed suit today," Chen said.
The Shanghai Composite Index closed 0.35 percent
lower at 2,396.3 points.
Beijing has actively encouraged its state-owned news media
organizations to list in the domestic market in order to secure
capital to improve services and extend Beijing's control in the
free-wheeling Internet sector.
Xinhuanet, the Internet portal of state news agency Xinhua,
is also set to raise 1 billion yuan in Shanghai, but like
People.cn, it will have to compete hard for advertising dollars
with new media Internet darlings Sina Corp and Sohu.com
Analysts said the positioning of People.cn and Xinhuanet is
different from that of Sina or Sohu because state-backed media
focuses on political news, while Sina and Sohu are more
Moreover, Sina and Sohu are not technically news
organizations and their websites work more like news aggregators
with some original content available. However, People.cn and
Xinhuanet hire reporters and analysts to conduct interviews and
The challenge for these state-backed media firms would be to
get transformed into more commercial entities and to draw
eyeballs and advertising dollars.
In 2010, China's Ministry of Finance was People.cn's biggest
customer, accounting for 22.2 percent of its revenue.
People.cn raised 1.38 billion yuan in its initial public
offering, more than twice its target, and is one of the first
state-controlled media groups to list. It sold 69.1 million
shares near the bottom of its indicative range of 20.0-22.50
People.cn had said it was aiming to raise about 527 million
yuan for working capital and to fund expansion.
In February, China Xinhua News Network Corp (CNC), the TV
unit of state-run Xinhua News Agency, debuted in Hong Kong
through a back-door listing initiated via a HK$700 million
share-swap of a listed firm previously known as Tsun Yip
CNC Holdings closed at HK$0.90 on Friday, down 32
percent from the close of its first trading day as CNC Holdings
on Feb 8.
($1 = 6.3060 Chinese yuan)
(Additional reporting by Clement Tan in HONG KONG; Editing by