Holmes Report 08 Dec 2010 // 12:00AM GMT
By Arun Sudhaman
BEIJING: As global PR networks continue to hoover up many of China’s best independent firms, the country’s biggest local agency has advised its peers to resist the temptation to sell.
BlueFocus PR president Peter Mao made the comments to the Holmes Report after his firm listed on the Shenzhen Stock Exchange earlier this year. Four years ago, BlueFocus was the focus of a major bidding war between several international agencies, before a mooted deal with Huntsworth Group eventually fell through.
Mao said that listing would offer much higher returns that being bought. “We can be independent and have our own operation and team. Chinese firms are tempted to sell – but listing is the better route for an independent, long term development.”
The BlueFocus IPO was particularly successful – its stock is currently trading at a price/earnings multiple of 70.5, well above its initial offering price of 33.86 RMB. According to the Holmes Report 2010 Global Rankings, BlueFocus is China’s biggest PR agency, with 2009 fee income of around $32 million.
“We have faced many temptations but decided to list,” said Mao. “We hope many local PR companies will take us as an example.”
Two other leading Chinese independent PR firms – Shunya and D&S Consulting – have also said that their preferred outcome is to list rather than sell. While Mao believes this is the right decision, he notes that there are several hurdles which must be overcome.
“In China, listing is a very difficult, complicated task,” he said. “It is much harder than in the UK, US or Hong Kong.”
This is one reason, adds Mao, that selling to a foreign firm – like Eastwei’s recent decision to become part of MSLGroup – becomes so attractive. Another, he points out, is that an agency needs to “achieve certain revenues” if it wishes to list. “In PR companies the revenue is not that high.”