KraneShares CSI China Internet ETF (Nasdaq Ticker: KWEB) now owns Alibaba (NYSE Ticker: BABA) as of Friday October 3, 2014.
New York, NY October 3, 2014
(additional information added: December 22, 2014)
After achieving a one year track record on August 1st and holding over $100mm in assets on August 20 2014, KWEB has become not only the first China ETF but also the first technology ETF to hold Alibaba1, the US’ largest initial public offering and China’s largest e-commerce company.2
“KWEB is uniquely positioned to provide access to one of the fastest growing sectors in the world: China’s Internet and e-commerce.” said Jonathan Krane, CEO of KraneShares, “While Alibaba’s record breaking IPO³ is a testament to the company’s continued innovation, it also raises awareness of the sector.”
Brendan Ahern, KraneShares’ Managing Director, added, “Alibaba’s successful IPO is due to the company’s vision and execution in building businesses in anticipation of Chinese consumers’ needs. The IPO is a testament to the hard work and vision of founder Jack Ma, and the leadership team and employees of Alibaba.”
“We are excited to become shareholders in one of the world’s most innovative and dynamic companies. Alibaba’s IPO is a demonstration of the company’s historic success. We believe that the China Internet sector is a very attractive investment opportunity right now.” said Jonathan Krane.
The KraneShares CSI New China ETF (NYSE ticker KFYP) is expected to add Alibaba at its December rebalance.
KraneShares, a product of Krane Funds Advisors, is focused on serving global investors with ETFs for the next-wave of China’s development. Founded in 2011, our New York based firm offers proprietary ETFs constructed to give US and global investors broad, diverse and quality exposure to China’s historic growth story.
New York, NY www.kraneshares.com – [email protected]
Sources: ¹ETF Trends article titled “Waiting on Alibaba” September 11th, 2014 ²Bloomberg article titled “Alibaba’s Banks Boost IPO Size to Record of $25 Billion” September 22, 2014 ³Bloomberg
KWEB invests in variable-interest entities (VIEs), which are investments in foreign-domiciled American Depository Receipts (ADRs). Rather than owning Chinese-domiciled entities, the VIEs have contractual arrangements designed to provide the economic benefits related to certain Chinese-domiciled companies. The structure of VIEs presents some unique risks that should be considered.
VIE structures do not give investors ownership in the operating company, as stock does. With a VIE, an investor has no direct claim on the core, restricted business assets of the VIE operating company. As a result, investors may not exert as much influence over the subject company as they could if they were owners of common stock. Often, the voting rights in the VIE operating company, especially in matters of corporate governance, are controlled by the principals who established the VIE operating company.
In addition, there is no guarantee as to the enforceability of the VIE structure, as it has never received explicit approval from the Chinese government and is recognized as a structure put in place principally to work around Chinese restrictions on foreign investment.