Cashing in on China

For venture-backed companies based in China, the U.S. IPO market was a rollicking place to be in September and October. For others, it was pretty dull.

At least four venture-funded companies based in China carried out initial public offerings between mid-September and mid-October, raising a combined total of more than $300 million. Over the same period, just one U.S company with VC backing, specialty chemical developer Amyris, made its market debut.

Looking at third quarter IPO performance, it seems the preponderance of foreign issuers was less a fluke than a reflection of strong investor demand. Of the 10 top-performing new issues of the quarter, half were from non-U.S. companies, according to Renaissance Capital. The top performer, India-based online travel company MakeMyTrip, saw its shares rise 89% in first-day trading in August and nearly double again over the following two months.

Meanwhile, shares of two China-based companies that went public in Q3, Country Style Cooking Restaurant Chain, a fast food chain with 100-plus locations, and Camelot Information Services, a provider of financial industry IT services, soared 73% and 60%, respectively, over the course of the quarter.

For the first half of October, the venture-backed IPO lineup was also dominated by China-based offerings:

• Global Education and Technology Group(Nasdaq: GEDU), a Beijing-based provider of English language exam prep services, raised $67 million in its Oct. 8 IPO. The company previously raised $30 million from SAIF Partners, which owned a 37% pre-IPO stake.

• Daqo New Energy Corp. (NYSE: DQ), a Wanzhou, China-based maker of polysilicon photovoltaic components, raised $76 million in its Oct. 7 IPO. Granite Global Ventures owned a 9% pre-IPO stake in the company.

• And ChinaCache (Nasdaq: CCIH), a provider of Internet content delivery services in China, raised $84 million in its Oct. 1 IPO. Major stakeholders in the company include Consolidated Capital Holdings, with a 25% stake, followed by Investor Growth Capital Asia (19%), Qiming Venture Partners (14%), JAFCO Asia Technology Fund (11%) and Intel Capital (10%).

A few days earlier, Country Style Cooking Restaurant Chain raised $82.5 million in its Sept. 28 IPO. Its principal shareholders include Regal Fair Holdings Ltd. (66% pre-IPO stake), Sequoia Capital (15%) and SIG China Investments (15%).

The same day Country Style went out, Amyris (Nasdaq: AMRS) raised $85 million to build out its business of developing renewable specialty chemicals and transportation fuels. Its shares closed at $16.50, below the anticipated range of $18 to $20 each. Venture stakeholders include Kleiner Perkins Caufield & Byers (12% stake), Khosla Ventures (11.4%), TPG Biotechnology Partners (9.5%), Maxwell Mauritius Pte (8%) and Advanced Equities Financial Corp.

Meanwhile, more venture-backed companies filed to go public, including two based in China:

• Cornerstone OnDemand, a Santa Monica, Calif.-based developer of talent management software, is seeking to raise $115 million. Bessemer Venture Partners is the largest venture holder in the company, with a 22% stake, followed by Meritech Capital (15%) and Bay Partners (14%). Previously, Cornerstone raised just under $41 million in venture funding, according to Thomson Reuters (publisher of VCJ).

• Fortegra Financial Corp., a Jacksonville, Fla.-based insurance service provider backed by Summit Partners, is seeking to raise $125 million.

• MecoxLane, a Shanghai-based mail order retailer, is seeking to raise $106 million. The company previously raised more than $113 million in venture backing from investors including SIG Asia Investments and Zero2IPO Capital.

• And ShangPharma, a Shanghai-based pharmaceutical R&D outsourcing company backed by TPG Growth, is looking to raise $90 million.