HONG KONG (Reuters) – Dangdang.com, known as the Chinese equivalent of Amazon.com (AMZN.O), has hired two investment banks for a U.S. initial public offering, aiming to list by the end of the year, sources close to the deal said on Monday.
The offering size had not yet been fixed, but was likely to come in at less than $1 billion, roughly in line with IPOs from other Chinese Internet companies listing in the United States, the source added.
Another source said a number of other investment banks had been approached, but some balked at the high valuations Dangdang was seeking.
“They were looking for a price that would have valued the company at something like 100 to 200 times 2009 earnings,” said the source, speaking on condition of anonymity because the IPO process was not yet public.
Chinese media had earlier reported that Dangdang had hired a new chief financial officer and chief operating officer in preparation for an IPO, without giving more details.
The online retailer has talked about a U.S. listing since 2006, but postponed the move because of market volatility and fierce market competition in the online retail industry.
Dangdang competes in China with Joyo.com, which Amazon purchased in 2004 for $75 million, and increasingly with Alibaba Group’s Taobao unit, which started as an online auction site but has moved into traditional online retailing in recent years.
Founded in the 1999, Dangdang.com has built up its position by offering cheaper prices and a localised search engine system suited to China’s fragmented retail market.
In 2006, the company received $30 million in venture capital from four investment firms, including Walden International and Doll Capital Management. The private investors took an aggregate 12 percent stake in the online bookseller, according to Chinese media reports. (US$1=HK$7.75)
By Doug Young and Kennix Chim