Interview With Wu Tianhua, CEO Of Tiger Securities: The Boom Of Chinese Enterprises Going To The United States For Listing Continues, Enabling New Economy Investment Banks To Compete For Incremental Value

Since the beginning of this year, many Chinese enterprises have chosen to go to the U.S. for listing in the United States, and have welcomed the hot subscription, although many factors such as the new crown pneumonia epidemic and Sino US trade friction have brought uncertainty.

For example, Golden Mountain Cloud, sound network, ideal car and other companies are hot issues, and the market value of the first day of listing skyrocketed. They bravely broke through in the turbulent market environment, leaving fresh footnotes for China's new economy companies to enter the world stage.

Tiger securities is the booster and beneficiary behind this IPO feast. In the first half of this year, a total of 16 Chinese companies went to the United States for listing, tiger securities participated in 11 and underwritten 6, making it the largest underwriter for Chinese companies to list in the United States.

After six years of development, this new internet securities company has expanded its business scope from retail brokerage business of us and Hong Kong stocks to institutional brokerage business, investment banking, ESOP (employee option plan) and wealth management. In March 2019, tiger securities itself will be listed on NASDAQ.

In the face of many uncertainties, why can this year's listing boom in the United States still set off? At the same time, with the experience of Party A and Party B, what kind of boosting role does tiger securities play behind the listing of Chinese enterprises in the United States? What advantages does it present compared with traditional European and American banks, and what kind of development layout will the company have in the future? Therefore, the 21st century economic report recently interviewed Wu Tianhua, the founder and CEO of tiger securities.

Wu Tianhua. Information map

Chinese enterprises going to the United States for listing: opportunities and risks coexist

In recent years, a large number of new economy companies emerge as the times require. After they have developed to a certain size and become Unicorn companies in all walks of life, they will no longer be suitable for continuous financing in the primary market. At this time, it is natural for them to go public in the secondary market. Major exchanges around the world have also released favorable policies to compete for the resources of high-quality new economy companies.

How to choose between different exchanges? Wu Tianhua believes that although all exchanges have different degrees of preferential policies, for most enterprises, considering the industry, benchmarking companies, their own structure and other factors, the listing location of enterprises is basically limited to the best place.

For example, from the perspective of industry, some enterprises are in consumption, AI, big data and other industries, so they will consider listing in A-share and Hong Kong stock market. Some companies that want to develop international business and seek global influence will choose to list in US stocks.

In addition, from the perspective of corporate structure, when the company develops to the stage of listing, the volume is already large, and it is not easy to change the structure. Therefore, generally speaking, companies with RMB structure will naturally choose to be listed in China after meeting the listing conditions of gem and Kechuang board. However, vie architecture companies, which have been growing up by financing US dollars, generally choose to list overseas.

Compared with Hong Kong stock market and a share market, the characteristics and advantages of American stock market are mainly in four aspects. First, the U.S. stock market has the shortest time to go public. If the listing process is smooth, it can take more than five months for enterprises to complete listing in the United States, and it will take about eight months for Hong Kong stocks to go public as soon as possible.

Second, the listing of US stocks is more certain. "There is no turning back in the bow. If the company has decided to IPO but fails in the end, it may undermine the confidence of early investors and the team itself." Wu Tianhua said.

Therefore, certainty is very important. The US stock market is very market-oriented. As long as the risk is fully disclosed in the prospectus and the buyer and the seller can reach an agreement, the certainty of listing will be very strong.

Third, the financing efficiency of US stock market is high. If an enterprise wants to issue additional shares after listing, the cycle will be shorter and more flexible.

Fourth, if an enterprise has an international business layout plan, the listing of American shares will also play an endorsement role in the company's brand image.

"However, it should be noted that the listing of US stocks also means higher internal control and compliance requirements for enterprises themselves, otherwise, enterprises will face severe punishment." Wu Tianhua said. For example, in April this year, lucky coffee happened in the US stock market. In other markets, there may be some tolerance for this. However, in the U.S. stock market, enterprises are basically rejected by one vote and delisted directly.

On the other hand, the class action system in the United States also means that companies will bear more economic responsibility in the face of violations. Therefore, companies listed in the United States generally buy the liability insurance of directors, supervisors and senior executives, and bear more compliance costs and internal control costs.

With the rise of new economy, China will be born with world-class securities companies

Since this year, despite the impact of multiple factors, such as the epidemic situation and Sino US trade friction, Chinese enterprises listed in the United States are still under the intense attention of the market, and the market value of many enterprises has skyrocketed on the first day of listing.

Wu Tianhua believes that the main reason behind this lies in: on the one hand, the release of water from the Federal Reserve has brought abundant liquidity to the capital market, making the listing and financing of companies more smooth. On the other hand, under the epidemic situation, companies in different industries are facing a double situation. While the development of traditional companies relying on offline is becoming more and more difficult, technology companies have stronger anti epidemic ability and better performance trend.

"In the U.S. stock market, the rise of technology giants is very good, and new listed technology companies can also get good valuations. So to sum up, this year is a perfect window for Chinese companies to go public in the United States. " He said.

For most founders, going public is the first time. In this process, lawyers, audit, investment banks and other intermediary agencies play an important role. Tiger securities IPO underwriting business this year is also very bright, the company has helped jinshanyun, voice network, ideal car, Xiaopeng auto and other companies to achieve listing.

Compared with traditional European and American banks, tiger securities has the advantage of bringing more incremental value, Wu said. First of all, due to the retail and institutional user base brought by the brokerage business, tiger securities can often bring more orders for enterprises when underwriting, which is always the most important thing for enterprises.

When it is difficult for enterprises to be listed and issued in 2019, tiger securities is the top two investment banks with the largest amount of orders contributed to the listing of many enterprises. With the booming IPO issuance of Chinese enterprises in the United States this year, tiger securities has brought about 2.4 billion US dollars of orders for Xiaopeng motor and 1.886 billion US dollars for ideal cars. At the same time, many orders belong to price insensitive type, which also helps enterprises to issue pricing.

"The orders we bring are not only funds, but also partners and industrial funds for the company." Wu Tianhua said. For example, tiger securities helped to introduce Xiaomi as an important IPO subscriber when the mobile data traffic sharing platform icloudlink was listed in the United States.

"In the process of the rise of China's new economy, we firmly believe that China will have its own world-class securities companies and investment banks. Tiger securities is looking forward to growing with the new economy company, better delivering the company's value, and finding unique industrial foundations or institutional investors with high recognition of the company's value, not just some social customers. " He said.

Second, tiger securities will also combine the company's industry characteristics and business needs to bring IR and PR assistance to the company. Wu Tianhua said that companies often attract attention from all over the world when they IPO, which is also a good time to help enterprises display products and gain more user awareness. Therefore, when ideal car and Xiaopeng automobile are listed, tiger securities will help to do some test driving activities, and bring incremental value in IR and PR for the company with its own platform resources.

Third, tiger securities's own experience of going public in the US stock market in March 2019 has made tiger understand more about the mentality of the CEO at this time, and can put himself in the position to help CEO solve the pain points.

"A few days before a company goes public, I often get calls from the CEO asking us to help solve some tough problems. At this time, our previous listing experience, team service speed and execution ability can really help the company. " He said.

In addition, some European and American investment banks may leave the market and give up underwriting because of the problems of valuation and low cost performance. Tiger securities carefully selected the next project in the early stage, even if the company encountered some difficulties in IPO, it would still adhere to accompany the company.

High volatility of US stocks provides more trading opportunities

In addition to the continued growth trend of investment banking business, tiger securities brokerage business in this year is also developing rapidly. According to the company's second quarter financial report, tiger securities added more than 30000 customers in the second quarter, nearly five times the new increase in the same period last year. The scale of new users' assets this year is expected to exceed the sum of the past five years.

Wu Tianhua analysis said that the growth of brokerage business has internal and external factors. From the perspective of external environment, this year's US stock market is relatively volatile, which will lead to more conflicts of views and more trading opportunities. At the same time, the listing and issuance of topic companies such as ideal automobile and Xiaopeng automobile has aroused more attention in the market and the activity of new transactions.

From the tiger's own point of view, the company's products are also constantly iterating to win the trust of more users. The company has developed from the original single brokerage business to the collaborative development of brokerage, investment banking, ESOP and other businesses. "Our business has become more massive and the moat has become wider." Wu Tianhua said. The interaction between different businesses enhances the service ability of tiger securities to C-end and b-end users, thus creating more incremental value.

At the same time, tiger securities is also constantly exploring globalization, and the company has carried out business layout in the United States, Australia and Singapore. Wu Tianhua said tiger securities will continue to intervene in more countries and regions.

In December 2019, tiger securities and the 21st century economic report jointly released "21 tiger Securities - China 50 index". The index is the first authoritative index to comprehensively track the development and growth trend of large Chinese enterprises in the US and Hong Kong stock markets.

Wu Tianhua said that thanks to the booming IPO market this year, more high-quality companies can be included in the "21 tiger Securities - China 50 index", which are also representatives of China's new economic forces. In the future, tiger securities hopes to further expand the influence of the index and provide help for more users' investment decisions.

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