A Chinese advertising firm backed by American and Asian venture capitalists launched a popular initial public offering on the Nasdaq Wednesday, July 13, after raising a greater-than-expected $197 million, as investors sought exposure to a fast-growing and potentially huge market.

The pricing valued Shanghai-based Focus Media Holding Ltd. at $630 million, or a lofty 30 times its 2004 earnings. Focus Media's American Depositary Shares priced at $17, according to a source close to the transaction, after underwriters had given an indicative range of between $14 and $16. Shares were up 15.6% from the offering price at $19.65 in midday trading.

Focus Media's offering comes amid a seesawing appetite for Chinese issues. Bank of Communications' strong IPO last month was followed by share declines after the IPOs of shipping company China COSCO Holdings Ltd. and coal producer Shenzhua Energy, all in Hong Kong .

But Focus Media is one of the few channels for non-Chinese investors to gain exposure to China 's non-Internet ad market, and it is the first Chinese advertising company to list in New York .

China has one of the world's fastest-growing ad markets. Spending was $7.7 billion in 2003, and that is expected to grow at an average rate of 16.3% per year through 2007, according to Focus Media's prospectus.

Existing shareholders sold 10.1 million shares while the company itself will take in about $106 million from the IPO. It plans to use $40 million of the cash over 18 months to expand its existing network of LCD displays in Grade A office buildings across China , where it enjoys exclusive agreements with landlords and property managers.

A source close to the transaction could not say exactly how many times the IPO was oversubscribed but commented, "At some stage, you just stop counting, but obviously the demand was really strong."

The IPO implies a valuation of $630 million for the company, with Focus Media CEO Jason Jiang's 41.3% stake worth $260.3 million. Jiang's holding company JJ Media Investment Holding Ltd. sold shares equivalent to 4% in the offering.

Focus Media's institutional investors hold most of their interests in the form of preference shares. Assuming those are converted to ordinary shares, Goldman, Sachs & Co. will hold 12.9% of the company; CDH FM Ltd. of Hong Kong, 8.3%; London-listed 3i Group plc, 5.2%; Menlo Park, Calif.-based Draper Fisher Jurvetson, 5%; Delaware-based Capital International Private Equity, 3.2%; Victory Venture Capital Ltd., 3.2%; and Softbank Corp., 3%. Other shareholders, including San Francisco-based WI Harper Group and Venture TDF Shanghai Co. Ltd., own the remaining 11.8%.

Underwriters Goldman Sachs ( Asia ) LLC, Credit Suisse First Boston , CIBC World Markets and Piper Jaffray & Co. exercised their option to purchase 1.5 million additional shares.

Draper Fisher Jurvetson is also the biggest shareholder in Chinese search engine Baidu.com Inc., which on Tuesday filed regulatory documents in the U.S. to raise up to $80 million in an IPO.

With the exception of shares sold in the IPO, Focus Media's backers will be locked up for a minimum of 180 days, according to the company's prospectus.

Focus Media initially filed to raise only $100 million but increased the upper limit of its IPO range to $185 million after strong investor demand, especially from U.S.-based hedge funds, sources said.

Focus Media is one of the largest advertising networks in China , using audiovisual television displays placed in commercial buildings in 44 Chinese cities. It sells spots on its TV network on the basis that it is able to capture the attention of China 's office workers. The company generated $20.5 million gross profit on $29 million in revenues in 2004, valuing it at 22 times 2004 revenues. This compares to Hong Kong Stock Exchange-listed outdoor advertising company Clear Media Ltd., which is trading at 7 times 2004 sales.

Focus Media's competitors include Target Media Ltd. of Shanghai , which recently received a $20 million second round of financing from a group led by Carlyle Group of Washington . Target Media has said it also plans an IPO on the Nasdaq, in its case to raise an estimated $150 million.

Another Focus Media rival is Beijing-based Digital Media Group Co. Ltd., backed by Chinese VC firm Gobi Partners Inc. and Japan 's NTT DoCoMo.

Chris Lin from Simpson Thacher & Bartlett LLP is counsel to Focus Media, with Douglas Freeman from O'Melveny & Myers LLP advising the underwriters.