Ads from Kuaishou Technology at a Beijing subway station on Feb. 3.
Photographer: Yan Cong / Bloomberg
Photographer: Yan Cong / Bloomberg
Kuaishou Technology, the operator of China’s most popular short video service after ByteDance Ltd.’s Douyin, jumped 194% in its Hong Kong debut after a $ 5.4 billion IPO that brought in hundreds of billions of dollars in orders.
The shares opened at HK $ 338, compared to the IPO price of HK $ 115, which Tencent Holdings Ltd. aided business was valued at $ 179 billion. Company sold stock at the top of its price range in a deal that ranks as the world’s largest internet IPO since Uber Technologies Inc.’s $ 8.1 billion US stock sale in May 2019.
Kuaishou Technology headquarters in Beijing, on Feb. 3.
Photographer: Yan Cong / Bloomberg
That spectacular rise lends Kuaishou a price tag rivaled by ByteDance – which last sought money at a $ 180 billion valuation – ushering the nine-year-old video app into the ranks of China’s largest technology companies. Once known for its quirky portrayals of Chinese rural life, Kuaishou is solidifying its place among a generation of mega startups, similar to the food delivery giant Meituan and Didi that grew up in the years after Alibaba Group Holding and Tencent Holdings.
If profits continue, that would make Kuaishou the second-best debut ever for an IPO of more than $ 1 billion in the world, data compiled by Bloomberg shows. It joins an already long list of floats that have appeared on their first day of trading in recent months amid an abundance of liquidity and ultra-low interest rates.
Morgan Stanley, Bank of America Corp. and China Renaissance were joint sponsors of the deal. Shares of Kuaishou were up 166% to HK $ 306 from 1:22 PM in Hong Kong. The stock could be added to the Hang Seng China Enterprises Index later this month if the market value was up to the measure 10 highest as of Friday’s close.
The stellar debut will be an encouraging sign for the bigger rival ByteDance, who is reportedly competing talks to list some of its assets in Hong Kong. Long a rumored IPO candidate, the TikTok owner got bogged down in fighting a US ban on its globally popular app last year after being labeled a threat to national security.
“A successful listing by Kuaishou will pave the way for its bigger rival,” said Bloomberg Intelligence senior analyst Vey-Sern Ling. “Douyin will be more motivated to come to the market and investors can gain a better understanding of China’s short video industry with Kuaishou’s regular disclosures going forward.”
Big winnings
China’s SMIC, Alibaba.com, posted the biggest profit ever on day one
Source: Bloomberg
Breaking records
Kuaishou’s coming-out party broke records in Hong Kong for the number of retail investors subscribing to its shares and the amount pledged in the process. About 1.4 million mom-and-pop investors – one in five people in the city – submitted HK $ 1.26 trillion ($ 163 billion) in orders, while institutional buyers held up nearly $ 200 billion.
The demand matched the frenzy for the Hong Kong leg of Ant Group Co.’s mega IPO, which netted HK $ 1.3 trillion in bids for its retail tranche, before its planned $ 17.2 billion offer collapsed.
“Growth technology companies are still in high demand,” said Gary Dugan, CEO of the Global CIO Office in Singapore. “As the world continues to grapple with the Covid crisis, investors remain focused and invest more in technology stocks with a strong growth story. Therefore, we expect demand for these types of IPOs to remain strong and early stock trading premiums likely to be extraordinary. “
Billionaire
Founded by former Google employee Su Hua and Cheng Yixiao as an app built around sharing animated GIF images, Kuaishou turned to short video in 2013 and added live streaming in 2016, gaining a foothold in what eventually became two of the most popular social media formats in the world.
At the opening price of HK $ 338, Su’s net worth has risen to over $ 21.1 billion and Cheng is worth $ 14.7 billion. The fortunes of two other company leaders were also increased to more than $ 3 billion.
The Kuaishou Technology app.
Photographer: Roy Liu / Bloomberg
The company had an average of 264 million daily active users on the main Kuaishou app as of November 2020, less than half of the 600 million on Douyin, according to the prospectus. Still, it is growing fast.
Revenues were up 49% to 40.7 billion yuan ($ 6.3 billion) in the first nine months of last year, after the company stepped up its advertising and e-commerce monetization efforts. While Kuaishou offers free access to the main platform, the startup takes some of the tips users give to their favorite live streamers performing viral challenges, lip-syncing to the latest pop songs and playing video games.
– With assistance from Zheping Huang, Edwin Chan, Venus Feng, Ishika Mookerjee and Kevin Kingsbury
(Updates share fifth paragraph move)