Chinese live-streaming and short video group Kuaishou set to raise up to $ 6.3 billion in initial Hong Kong public offering to test investor appetite for the industry technology as it faces increasing regulatory scrutiny.
The deal could value Kuaishou, which competes with ByteDance’s TikTok, up to $ 61.7 billion and would be the largest tech IPO since Uber transport company went to market in 2019.
The listing will rise between $ 4.9 billion and $ 5.4 billion, but it could rise to $ 6.3 billion if bankers exercise an overfill option to increase its size, according to a term sheet seen by the Financial Times. The stock price is expected to be between HK $ 105 (US $ 13.55) and HK $ 115 (US $ 14.84) on Friday and start trading on February 5.
The IPO comes as Chinese tech companies face an increasingly uncertain regulatory environment. The $ 37 billion Hong Kong and Shanghai IPO of payment firm Ant Group was arrested by Beijing at the last minute in November, when its e-commerce subsidiary Alibaba was subject to a antitrust investigation.
Kuaishou, which is backed by Chinese internet group Tencent, derives most of its revenue from users who send virtual gifts to live broadcast hosts. The company takes about half the price of the gift, which can range from a few cents to 2,000 Rmb (US $ 309).
Live broadcast rules announced in November prohibit teens from buying virtual gifts on platforms such as Kuaishou and limit the total spending of a single user. The regulations are also tightening controls over live e-commerce, where video hosts promote products to buyers, a growing business for Kuaishou.
Kuaishou’s competitors, including TikTok, have faced controversy over their operations and use of data amid tensions between the United States and China. December deadline for ByteDance to restructure TikTok’s US operations passed without sourl, and the company remains in negotiations on the status of the short video application in the country.
Kuaishou’s app attracted around 262 million daily viewers in the first nine months of last year, who spent an average of 86 minutes per day watching videos. The company reported an operating loss of RMB 9 billion out of RMB 41 billion in revenue during the same period.
The company has spent a lot of money on attracting new users in the face of an increasingly crowded online video market in China.
The main investors in the Kuaishou IPO include asset managers Invesco and Fidelity, as well as Singaporean state-backed investors Temasek and GIC, who will together buy shares worth up to 2.5 billion. of dollars with a six-month lock-in period.
“The quality and size of the major investors is among the highest that we have seen among Chinese technology companies to come into the market,” a banker said of the transaction. “This shows that the market is always asking for more liquidity from large, high-growth technology companies.”
Kuaishou will use the funds for such purposes as research and development, acquisitions and investments, and expanding its ecosystem, according to the terms sheet.
Tencent has an approximate 22% stake in Kuaishou after leading a $ 3 billion fundraising round last year. As number two in China’s online video market after Douyin – the Chinese version of TikTok – “Kuaishou is less sensitive to political noise,” according to a banker working on the IPO.
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