Rumors Lashou Canceling IPO, and Our Sources Suggest…

It seems like just yesterday that Lashou was all ready to go IPO on the NASDAQ as LASO. But now, in the middle of its road show, a rumor is spreading that its IPO is cancelled.

Tu Hongchuan, a Chinese venture capital CEO, seems to have started the rumors by posting this message to his Sina Weibo account this morning:

Is Lashou canceling its IPO? Wall Street investors are saying “Lashou is not going to IPO.” I hope this is not true, Lashou’s angel investor is a buddy of mine. Go!

It would be a truly bizarre time to cancel, given that their scheduled IPO is right around the corner, but adding fuel to the fire is that as yet, the media hasn’t been able to get a response from Lashou’s CEO Wu Bo, and Zhu Xiaohu of GSR Ventures, a major Lashou investor, said it was inconvenient to comment at this time.

We spoke with a source familiar with Lashou’s corporate leadership, who could not confirm the rumors, but told us:

I was talking to some investment bankers just the week before and it seemed like things were on pace, so something must’ve happened. [It] may be regulatory-related.

The source, who told us they had enjoyed working with Lashou and praised its CEO Wu Bo, also added:

The company claims that Lashou’s China operations was breaking even towards the later half of the year, led by strong performance in Guangdong area. But this does not take into account the massive amount they poured into marketing. It’s not necessarily Lashou as a company, but the whole group-buy industry in China.

Lashou’s road to IPO has not been entirely without bumps. Last month there were rumors about possible upcoming layoffs for the company. Also, Lashou executives have pledged to buy their own shares at the IPO, which is definitely unusual.

What’s going on behind closed doors? We have no idea. It should be clear fairly soon whether or not Lashou plans to IPO, but if it doesn’t, there’s got to be a pretty significant reason that would cause it to cancel this late in the game.