November 10, 2010 / 3:53 PM / 9 years ago

UPDATE 2-China's Noah Holdings soars 33 pct in debut

* Noah shrs close at $15.99, 33.3 pct above $12 IPO price

* RDA Microelectronics closes 19.4 pct above $9 IPO price (Adds closing prices, writes through)

By Clare Baldwin

NEW YORK, Nov 10 (Reuters) - Shares of Chinese wealth management company Noah Holdings Ltd (NOAH.N) jumped 33.3 percent in their market debut as investors bet on a growing middle and upper class in China.

U.S. investors have proved eager to tap China’s rapidly growing consumer base, and China-based companies have been among the best-performing IPOs in the United States this year. Wealth management businesses have also been eyed for investment because of their steady revenue streams.

“It’s a high-demand area of the marketplace,” said David Menlow, president of IPOfinancial.com. “This is a sweet spot ... China.”

China ranked fourth in the world in the number of high net worth individuals in 2009, according to the Heading Report, which looks at individuals with investable assets of $1 million or more. China’s wealthy had about $5.6 trillion of assets in 2009, according to the report.

Noah Holdings has more than 300 relationship managers in 28 offices in some of the most developed regions of China, including the Yangtze River Delta, the Pearl River Delta and the Bohai Rim. It sells products that are not traded over exchanges, including fixed income investments, private equity funds and securities investment funds.

Still, Noah Holdings estimates it has reached only 2.5 percent of China’s high net worth population with $400,000 or more of investable assets in 2009.

“The revenue curve is just starting to kick in for this company,” Menlow said.

Noah Holdings, which makes its money on commissions and recurring service fees, has posted increasing revenue for each of the past three years and is on track to do so again in 2010. The company posted a loss attributable to ordinary shareholders in 2008 but was profitable in 2007, 2009 and so far in 2010.

In the six months ended June 30, Noah Holdings posted net revenue of $13.7 million, up more than 135 percent from a year earlier. Net income attributable to ordinary shareholders increased more than 400 percent to just above $4 million in the same period.

Noah Holdings’ shares opened at $15. They rose as high as $17.20 or 43.3 percent above their $12 IPO price in their debut on the New York Stock Exchange.

The company on Tuesday raised about $100.8 million, or 20 percent more than expected, in its initial public offering by selling 8.4 million American Depositary Shares for $12 each, above its estimated price range of $9 to $11.

Noah Holdings’ backers include venture capital firm Sequoia Capital China.

Separately, shares of China-based RDA Microelectronics Inc RDA.O closed at $10.75 on the Nasdaq, 19.4 percent above their $9 IPO price.

The company, which develops semiconductors for cellular, broadcast and connectivity applications, sold 7.5 million American Depositary Shares for $9 each, raising $67.5 million in its IPO.

Underwriters on the RDA Microelectronics IPO were led by Morgan Stanley and Credit Suisse; underwriters on the Noah Holdings IPO were led by JPMorgan and Bank of America Merrill Lynch.

RDA Microelectronics is trading on the Nasdaq under the symbol “RDA” and Noah Holdings is trading on the New York Stock Exchange under the symbol “NOAH.” (Reporting by Clare Baldwin; Editing by Lisa Von Ahn, Matthew Lewis and Steve Orlofsky)

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