Momo Technology, the Chinese social networking website, raised $216 million from its Nasdaq initial public offering on Thursday, shrugging off news that its head faced allegations of misconduct from a former employer.
The company sold 60 million American Depository Receipts at $13.50 per share, in the middle of its targeted $12.50 to $14.50 per unit range, after Yan Tang, Momo’s co-founder, chairman and chief executive officer was singled out in a December 10 stock exchange filing alleging malpractice.
The filing said Tang had received a legal letter from Wangzhiyi Information Technology, a unit of his previous employer NetEase, accusing him of breaching employment terms and violating competition agreements. According to the letter, Tang is said to have launched Momo in July 2011 while still working for Wangzhiyi.
Momo said the allegations against Tang are “malicious and [that he] intends to vigorously defend himself against them.”
Investors were by and large undeterred by the news, with close to 400 institutional and retail lines in the IPO order book, according to sources close to the deal.
One banking source noted that while the last-minute allegations may have kept some investors unfamiliar with Momo at bay, they had no impact on those who had already done their homework on the company. “For people who knew the company, it wasn’t a problem,” the source told FinanceAsia.
Chinese funds, regional long-only institutional investors, hedge funds and private banks made up the bulk of the book.
Alibaba and 58.com acted as concurrent private placements and pledged a combined $60 million in the social networking company. This $60 million is on top of the base deal.
At $13.50 per share, the company is valued at 21 to 22 times its forecast 2016 earnings. Momo has over 130 million members in its network and over 60 million monthly users. It was founded in 2011 as a location-based social networking application that allows users to chat with people nearby and to participate in group events.
Credit Suisse, JP Morgan, Morgan Stanley and China Renaissance oversaw the deal.
