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QMSK Upsizes US IPO To Comply With Nasdaq's Newly Proposed Listing Rules For Chinese Firms

The provider of aftermarket services for the auto insurance sector has quadrupled the size of its original IPO fundraising target to as much as $37 million

Key Takeaways:

QMSK has sharply raised the size of its planned Nasdaq IPO, after the Nasdaq said it plans to require all listings by Chinese firms to raise at least $25 million

The company's revenue grew 38% in its latest fiscal year, but its profit fell nearly 10% as it spent heavily on expansion

By Doug Young

A newly updated Nasdaq listing application by QMSK Technology Co. Ltd. is most noteworthy for a huge upsizing of the company's fundraising plan, rather than any news about this provider of aftermarket services for the auto insurance industry. But the supersizing of its fundraising target to as much as $37 million from a previous $9 million hardly reflects any new confidence by the company in strong investor appetite for its shares.

Instead, the radical upsizing appears to be the direct result of a looming crackdown by the Nasdaq announced earlier this month on small new listings by Chinese companies. Such listings have come to dominate new IPOs by Chinese firms on the Nasdaq, often raising miniscule sums of $10 million or less. They also typically contain very small floats, with well under 10% of a company's shares typically available for trading.

The result of such small floats is often big price volatility, usually to the downside, which can leave less sophisticated retail investors with big losses when stock prices suddenly plunge. Compounding this issue is very aggressive valuations that many of these small Chinese companies list at, making big drops in their share prices post-IPO almost inevitable.

QMSK ticked all of those boxes when it first applied for its IPO back in March. The company, which provides aftermarket risk assessment and other value-added services to auto insurers, initially aimed to raise ...