(Bloomberg) – Kuaishou Technology, the maker of China’s most popular short video service to Douyin from ByteDance Ltd., jumped 161% with its debut in Hong Kong after an initial $ 5.4 billion public offering worth hundreds of billions of dollars attracted to orders. .
The stock closed at HK $ 300 after rising to as high as HK $ 345, compared to the IPO price of HK $ 115, according to the firm owned by Tencent Holdings Ltd. supported, valued at $ 159 billion. The company sold shares at the top of its price range in a deal that is the largest internet listing in the world since Uber Technologies Inc. US $ 8.1 billion US share sale in May 2019.
That spectacular rise gives Kuaishou a price tag that draws closer to TikTok’s parent ByteDance – which last sought funds at a valuation of $ 180 billion – and introduces the nine-year-old video app into the ranks of China’s largest technology companies . Kuaishou, formerly known for its peculiar depictions of Chinese rural life, is its place among a generation of mega-starters such as Meituan and food leader Didi Chuxing, who grew up in the years after Alibaba Group Holding Ltd. and Tencent.
The return of 161% on the first day gives Kuaishou the second best debut ever for a stock exchange of more than $ 1 billion in the world, according to data from Bloomberg. This is in line with an already long list of fluctuations that have appeared on their first trading day over the past few 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 agreement. The stock could be added to the Hang Seng China Enterprises Index later this month if the end-of-Friday market value is among the top ten.
The stellar debut will be an encouraging sign for bigger rival ByteDance, which is reportedly in talks to list some of its assets in Hong Kong. The TikTok owner was a rumor of an IPO candidate and was caught last year in the fight against a US ban on his globally popular app after being labeled a national security threat.
“A successful listing by Kuaishou will pave the way for its bigger competitor,” Bloomberg Intelligence senior analyst Vey-Sern Ling said. “Douyin will be more motivated to enter the market and investors can gain better insight into China’s short video industry with Kuaishou’s regular disclosure ahead.”
Breaking records
Kuaishou’s outgoing party broke records in Hong Kong for the number of retail investors subscribing to its shares and the amount promised 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) orders, while institutional buyers pushed up nearly $ 200 billion.
The demand was in line with the madness for the Hong Kong drive of Ant Group Co.’s mega-exchange, which offers HK $ 1.3 billion for its retail amount, before the 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. ‘While the world continues to struggle with the Covid crisis, investors remain focused and invest more in technology stocks with a strong growth story. Therefore, we expect that the demand for these types of IPOs will remain strong and that the premium price premiums are likely to be exceptional. ”
Billionaires
Kuaishou, founded by former Google employees Su Hua and Cheng Yixiao as an app compiled to share animated GIF images, pointed to a short video in 2013 and added live streaming in 2016, which became focal points has in what eventually became two of the most popular social media formats in the world. .
With the doll, Su’s net worth rose to $ 18.7 billion, while Cheng was worth $ 13.1 billion. The fortunes of two other executives of the company increased to more than $ 2.7 billion each.
According to the prospectus, as of November 2020, the firm had 264 million daily active users on its main Kuaishou app, less than half of the 600 million on Douyin. Yet it grew rapidly.
Revenue rose 49% to 40.7 billion yuan ($ 6.3 billion) in the first nine months of last year, after the company increased its monetization efforts through advertising and e-commerce. While Kuaishou offers free access to its main platform, the startup takes some tips that give users their favorite live streamers performing viral challenges, lip-synching with the latest pop songs and playing video games.
‘Kuaishou’s business model is unique and there is a certain degree of stickiness in the user base’ because the content providers come from rural areas, said Kerry Goh, chief investment officer of Kamet Capital Partners Pte, which participated in the IPO. “Investors are prescribing a large premium to businesses that are unique in this low interest rate environment.”
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