Sina MBO should watch former large shareholders' response, senior market watcher

Sina Corporation (SINA.NASDAQ) should closely watch the response of its former large shareholders, said Liu Gang, general manager of Shenzhen Capital Group, citing the management buyout (MBO) program initiated by Sina's management.

Sina Corp announced on Monday that its management, including CEO Cao Guowei, will purchase about 5.6 million common stocks valued around 180 million US dollars of the company, to become the largest shareholder.

Liu added that management would gain easier access to funds given a positive response from former large shareholders. Otherwise, it is still questionable over the management's power in the board.

The inadequate power of management has created a conservative corporate culture, which led to frequent departures of core teams and lost opportunities, said Li Huabing, vice president of Sina Group.

Li noted that the MBO could help settle the problems in capital operation, core team loyalties, and business expansion to some extent.

Sina could raise funds for the MBO via bridge financing, which helps bypass administrative approval.This is the first MBO case to have hit China's internet industry.

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