Tech mogul gets US$13b richer just by leaving New York for China

Hong Kong

WHY be content with almost US$2 billion when your net worth can be multiples more simply by moving your company from one stock exchange to another?

Zhou Hongyi did just that, relocating his online security firm to China and merging it into a shell company, which soared as much as 550 per cent since he announced the plan in November. Qihoo 360 Technology Co delisted from the New York Stock Exchange in July 2016 and began trading Wednesday in Shanghai as 360 Security Technology Inc. The move boosted Mr Zhou's net worth to US$14.1 billion, making him China's 11th-richest person, according to the Bloomberg Billionaires Index.

Mr Zhou, 47, told reporters in November that aligning himself with China's national interest was among the reasons he moved the listing to his homeland, where the Communist Party has been tightening the country's "cybersecurity sovereignty". The first day back has been rocky. The shares swung between gains and losses in morning trading on Wednesday - opening 3.8 per cent higher before declining as much as 10 per cent at the close. The benchmark Shanghai Composite Index dropped 1 per cent.

Still, China's richer tech valuations may have been a draw, said Sun Mengqi, an analyst at BOCOM International Holdings Co. "There could be a substantial valuation gap between the US and China." Mr Zhou owns a 23 per cent stake in 360 Security, directly and through holding companies Tianjin Qixin Zhicheng Technology Ltd and Tianjin Zhongxin Investment LP, according to an acquisition proposal last month.

The firm posted 2016 revenue of 9.9 billion yuan (S$2.1 billion), up from 9.4 billion yuan a year earlier.

Mr Zhou isn't the first tech mogul to take the back door to China. Billionaire Jason Jiang's Focus Media went private in a US$3.7 billion buyout in 2013 after coming under pressure from short-seller Carson Block, relisting two years later in Shenzhen. BLOOMBERG