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Investors Rush for Baidu Shares
2005-8-6 10:48:40      The Guardian
Wall Street was partying like it was 1999 last night, after shares in, the Google of China, rose 354% in their market debut, the best performing initial public offering in five years.

The spectacular rise recalled the heady days of the dotcom boom when technology and internet-related companies routinely trebled in value in their first day on the market. sits at the intersection of the two hottest markets of 2005 - China and the internet.

Shares in the internet search engine were priced at $27 on the Nasdaq market in New York. They surged as high as $151.21 during the trading session, a rise of more than 450%, before settling at $122.54. The closing price valued the company at more than $4bn (?.26bn).

"It's been amazing," said Sal Morreale at the brokerage Cantor Fitzgerald. "There are obviously a lot of speculative buyers who think this could be an Asian Google."

According to Reuters, the first day was the most dramatic since shares in software maker Selectica soared 371% in its March 2000 debut.

Baidu, based in Beijing and named after an ancient Chinese love poem, sold 12.5% of its equity to outside investors. Chief executive Robin Li, 36, who co-founded the firm five years ago, becomes one of a new generation of mega-rich in China, with his 25.8% stake worth more than $1bn. is the leading internet search engine in China and investors are betting on the potential for huge growth.

The company only recently became profitable, earning $1.8m on sales of $13.6m in the first half of the year. But investors are drawing comparisons with Google, which has rapidly become a cultural and business phenomenon.

There are estimated to be around 115 million internet users in China, with predictions of 187 million by 2007. That still leaves a large market to go for in a nation with more than one billion people.

Mr Li said the business would focus on China. "Our job is to solidify and expand from here. We think there's lots of room for us to grow."

Last year Google bought a 2.6% stake in the Chinese company.

Analysts said had benefited greatly from arriving in the slipstream of Google. When Google floated last August at $85 a share, many believed the stock was overpriced. By yesterday, however, shares were worth $292.35. The company is valued at around $85bn.

"Everyone remembers they could have had Google at $85 and don't want to let it happen again," said David Menlow, president of IPO Financial, a Wall Street newsletter.

The IPO raised $86.6m for Baidu.

(By David Teather)

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