Chinese live stream and short video group Kuaishou will raise up to $ 6.3 billion in an initial public offering in Hong Kong in a test of investors’ appetite for China’s technology sector, as it is increasingly being watched by legislation.
The deal could value Kuaishou, which competes with ByteDance’s TikTok, up to $ 61.7 billion and be the largest technology exchange since the Uber company Uber went on sale in 2019.
The listing will rise between $ 4.9 billion and $ 5.4 billion, but it could rise to $ 6.3 billion if bankers use an overall call option to increase its size, according to the term published by the Financial Times. Shares are expected to cost between HK $ 105 (US $ 13.55) and HK $ 115 (US $ 14.84) on Friday and start trading on February 5.
The flotation comes as Chinese technology companies face an increasingly uncertain regulatory environment. The $ 37 billion investment firm Ant Group in Hong Kong and Shanghai was stopped by Beijing in November, while its e-commerce subsidiary Alibaba was subjected to an antitrust investigation.
Kuaishou, backed by Chinese internet group Tencent, earns most of its revenue from users who send virtual gifts to live hosts. The company takes about half the gift price, which can range from a few cents to Rmb2,000 (US $ 309).
Live streaming rules announced in November prohibit teens from buying virtual gifts on platforms like Kuaishou and limit total spending by any user. The regulations also tighten controls on live streaming e-commerce, where video hosts promote goods to buyers, which is a growing business for Kuaishou.
Kuaishou’s competitors, including TikTok, came across their operations and data usage amid tensions between the US and China. In December, a deadline for restructuring TikTok’s US operations passed without an agreement, and the company remains in negotiations over the status of the short video app in the country.
Kuaishou’s app had about 262 million daily viewers in the first nine months of last year, watching an average of 86 minutes a day of videos. The company reported an operating loss of Rmb9 billion to Rmb41 billion in the same period.
The company has spent a lot on bringing in new users as it faces an increasingly busy online video market in China.
Cornerstone investors in Kuaishou’s stock exchange include asset managers Invesco and Fidelity, as well as Singapore state-backed investors Temasek and GIC, who will jointly buy shares worth up to $ 2.5 billion over a six-month period.
“The quality and size of cornerstone investors is among the highest we have seen in Chinese technology companies on the market,” said one banker. “It shows that the market is still calling for more liquidity in big, big growing technology companies.”
Kuaishou will use the funds for purposes including research and development, acquisitions and investments and expanding its ecosystem, according to the term sheet.
Tencent has a 22 percent stake in Kuaishou after leading a $ 3 billion round of financing last year. According to the banker who worked on the IPO, Douain, the largest player in the online video market in China, the Chinese version of TikTok, is less sensitive to political noise.
Kuaishou hired Bank of America, China Renaissance and Morgan Stanley to work on the IPO.
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