Fushi Copperweld Going Private Could Be Huge for Chinese Equity Valuations
At first glance, it might not appear that a small Chinese manufacturer of copper wire for various industries would be that crucial to the Chinese small cap sector as a whole. The key is that the Co-CEO has made an offer to take the company private for $11.50, or roughly 20% above current prices.
It could open the door to higher valuations in the sector as a whole, or maybe similar transactions across the sector as management grows increasingly tired of dealing with US investors that think every Chinese company is a scam.
Some of the comments on this article lead me to that a couple of other going private deals have been proposed. The more interesting is China Security and Surveillance (CSR). Something else worth following to see if the completion of these deals drives more investors into these stocks that offer extreme valuation. Hard to see these companies as fraud if somebody is willing to pony up $400M.
Disclosure: Long LIWA. Please read disclaimer page.