Google-backed Xunlei postpones $200 mn IPO

HONG KONG, CHINA: Xunlei Ltd, a Chinese Internet platform company in which Google Inc has a small stake, decided to postpone its initial public offering of up to $200 million in the United States because of unfavorable market conditions, IFR reported on Friday, quoting a source with knowledge of the decision.

Shenzen, China-based Xunlei had planned to start meetings on June 17 with investors to gauge demand for its IPO, said IFR, a Thomson Reuters publication.

The decision comes as a slump in global equity markets has forced several companies to postpone or cancel their IPO plans. Companies delaying or cancelling IPOs include U.S. lender Ally Financial Inc, Australian mining start-up Resourcehouse Ltd and Chinese auto parts company Nanning Baling Technology Co Ltd.

Contributing to the weak market sentiment are recent allegations that U.S.-listed Chinese companies have used fraudulent accounting to inflate their books as they joined U.S. exchanges via reverse takeovers.

Harbin Electric was the latest to be fall under a cloud of doubtful accounting. Its shares collapsed on Thursday after a report from a short-seller led investors to bail out of the U.S.-listed Chinese maker of electric motors.

"I think it's more because of the (weak) sentiment and the volatility in the market," said Linus Yip, chief strategist at First Shanghai Securities.

"Concerns about corporate governance among Chinese companies is only one of the many factors that is dampening the already weak sentiment on IPOs market both locally and in the U.S," Yip said.

Sean Shenglong Zou, Xunlei's co-founder, is the company's biggest shareholder with a 27.5 per cent stake, while Google owns 2.8 per cent of the shares.

The company had filed to list its shares on the Nasdaq under the symbol "XNET." Xunlei planned to use proceeds from the offering to invest in technology, infrastructure and product development and to acquire digital media content, according to its IPO prospectus.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO can differ.

JPMorgan and Deutsche Bank were hired as lead underwriters for the offering.