TikTok rival Kuaishou to lift as much as $6.3bn in Hong Kong IPO
Chinese live streaming and short video group Kuaishou will raise up to $ 6.3 billion from an IPO in Hong Kong to test investor appetite for the Chinese technology sector as it faces increasing regulatory scrutiny.
The deal could value Kuaishou, which competes with ByteDance’s TikTok, at as much as $ 61.7 billion and would be the largest tech IPO since ride-hailing company Uber launched in 2019.
The listing will rise between $ 4.9 billion and $ 5.4 billion, but that could climb to $ 6.3 billion if bankers exercise an allotment option to increase their size, according to a term sheet published by the Financial Times. The price of the shares is expected to range between HK $ 105 (US $ 13.55) and HK $ 115 (US $ 14.84) on Friday and begin trading on February 5th.
The IPO comes as Chinese tech companies face an increasingly uncertain regulatory environment. The $ 37 billion IPO of payment company Ant Group in Hong Kong and Shanghai was stopped at the last minute in November by Beijing, while its e-commerce subsidiary Alibaba is the subject of an antitrust investigation.
Kuaishou, which is backed by the Chinese internet group Tencent, makes most of its revenue from users who send virtual gifts to live streaming hosts. The company takes roughly half the gift price, which can range from a few cents to Rmb 2,000 ($ 309).
The live streaming rules announced in November prohibit teenagers from buying virtual gifts on platforms like Kuaishou and limit a single user’s total spend. The regulations also tighten controls on live streaming e-commerce, where video hosts advertise goods to buyers, a growing business for Kuaishou.
The market still demands more liquidity in large, high-growth technology companies
Kuaishou competitors, including TikTok, have faced controversy over their business operations and use of data amid tensions between the US and China. In December, a deadline for ByteDance to restructure TikTok’s U.S. operations expired without an agreement, and the company continues to negotiate the status of the short video app in the country.
Kuaishou’s app had approximately 262 million viewers daily for 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 9 billion Rmb to 41 billion Rmb in sales in the same period.
The company has invested a lot of money in attracting new users as it faces an increasingly crowded online video market in China.
The cornerstones of Kuaishou’s initial public offering include asset managers Invesco and Fidelity, as well as Singaporean government-backed investors Temasek and GIC, who will collectively buy up to $ 2.5 billion in shares with a six-month lockup period.
“The quality and size of the cornerstone investors are among the highest we’ve seen in Chinese tech companies,” said a banker of the deal. “It shows that the market is still calling for more liquidity in large, high-growth technology companies.”
Kuaishou will use the funds for purposes such as research and development, acquisitions and investments, and expanding its ecosystem, according to the term sheet.
Tencent owns approximately 22 percent of Kuaishou after leading a $ 3 billion financing round last year. According to Douyin, the Chinese version of TikTok, Kuaishou is less prone to political noise after Douyin, the Chinese stock exchange, number two in China’s online video market.
Your ultimate guide to the billions made and lost in the world of Asia Tech. A curated menu with exclusive news, crisp analysis, smart data and the latest tech insights from FT and Nikkei
Register here with one click