New York (HedgeCo.net) – In a reversal of fortune, dozens of Chinese firms that were listed on exchanges in the United States with the hopes of gathering legions of foreign investors are now looking to be taken private and delisted from U.S. exchanges.

In a report from Reuters, there are reportedly 33 Chinese companies that have unveiled plans to undertake such a move and these deals are worth a collective $40 billion. The problem these firms face are the current valuations are much lower than the historical valuations and that has led to shareholders questioning the deals. These deals and the low valuations have even led to a new industry of sorts with hedge funds and attorneys pushing the companies for greater prices and voting against low-ball bids.

The article from Reuters included a quote from Lin Yang, a portfolio manager at FM Capital. “We want to put as much pressure as possible. If no shareholder challenges the offer, it will go through on the cheap,” stated Yang while speaking specifically about a buyout offer for China Cord Blood Corp.

Yet another quote from Michael Cheng, a consultant with law firm Andrew W Y Ng & Company stated that “Listed issuers, before they consider whether to go private or be listed elsewhere, they must remember that at the end of the day, they have sought public funds. That means they must realize that minority shareholders should have a role to play in the business of the company.”

Rick Pendergraft
Research Analyst
HedgeCoVest