Kuaishou Technology has its eyes on the world’s largest IPO in over a year, seeking to raise about $ 5 billion from a Hong Kong stock sale as short video and live streaming apps gain popularity in China.
Kuaishou – which competes with ByteDance Ltd., the rival Chinese company behind TikTok and its sister app Douyin – began taking orders from investors on Monday. With the offering, which could value it at more than $ 60 billion, Kuaishou joins a string of technology companies from China that are listed on the Hong Kong stock exchange.
Kuaishou, meaning ‘quick hand’ in Chinese, is backed by Tencent Holdings Ltd. It was co-founded by Su Hua and Cheng Yixiao, software engineers who previously worked for Google China and Hewlett Packard.,
respectively.
Both Kuaishou and ByteDance have taken advantage of the growing demand from younger Chinese to view and record short videos on their smartphones. The eponymous short video platform is the world’s second largest, according to data reported in the prospectus, and there were an average of 305 million daily active users of its apps and mini-programs in China during the nine months from September.
With a minimum trade size of $ 4.95 billion, the IPO would be the largest in the world since late 2019, when state-controlled Saudi Arabian Oil Co., commonly known as Aramco, raised $ 29.4 billion, figures show from Dealogic.
At the top, the deal implies a market capitalization of $ 60.9 billion, showing how Kuaishou’s valuation has grown rapidly. According to PitchBook, a data provider, it was valued at $ 28.6 billion last February after obtaining $ 3 billion in funding from a Tencent-led consortium. In total, the company has raised more than $ 4 billion in multiple funding rounds, data from PitchBook shows.
Kuaishou takes a more democratic approach than competing services and says the systems intentionally show users a wider range of videos, rather than just star maker content. The prospectus says that nearly 40% of the videos are viewed more than 100 times and that the co-founder, Mr. Cheng, believes that Kuaishou should be somewhere where ‘ordinary people are champions’.
Still, the list document also highlights a few creators who have gained widespread popularity, including a young inventor who calls ‘Hopeless Edison’, a pair of cordyceps fungi in Sichuan province, and a British professor in Beijing conducting chemistry experiments online.
The company is selling 365.2 million new shares with an indicative range of 105 to 115 Hong Kong dollars, according to a term sheet from The Wall Street Journal. It plans to set the offer price on January 29.
The size of the offering could reach $ 6.2 billion if insuring banks exercise an option to sell 15% more shares.
Kuaishou has brought in 10 cornerstone investors including Capital Group, Temasek and BlackRock Inc.,
Canada Pension Plan Investment Board and Boyu Capital. They agreed to buy a combined $ 2.45 billion worth of the stock regardless of the deal price.
Morgan Stanley units,
bank of America Corp.
and China Renaissance Holdings Ltd.
act as joint sponsors for the deal.
Write to Joanne Chiu at [email protected]
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Appeared in the January 25, 2021 print edition as “ Chinese Video Company to Raise $ 5 Billion. ”