The Chinese group of live streams and short videos Kuaishou is expected to raise up to $ 6.3 billion in a Hong Kong initial public offering in a test of investor appetite for China’s technology sector, which faces increasing regulatory scrutiny.
The deal can value Kuaishou, which competes with ByteDance’s TikTok, at up to $ 61.7 billion and would be the largest technology IPO since the Uber company hit the market in 2019.
The listing will increase between $ 4.9 billion and $ 5.4 billion, but that could rise to $ 6.3 billion if bankers exercise a supplementary lot option to increase their size, according to a commitment. seen by the Financial Times. The shares are expected to be priced on Friday between HK $ 105 ($ 13.55) and HK $ 115 ($ 14.84) and start trading on February 5.
The fluctuation comes at a time when Chinese technology companies face an increasingly uncertain regulatory environment. The $ 37 billion IPO in Hong Kong and Shanghai of payments firm Ant Group was interrupted by Beijing at the last minute in November, while its e-commerce affiliate Alibaba is subject to an antitrust investigation.
Kuaishou, which is supported by the Chinese internet group Tencent, gets most of its revenue from users who send virtual gifts to live streaming hosts. The company gets about half the price of the gift, which can range from a few cents to Rmb 2,000 ($ 309).
The livestreaming rules announced in November prohibit teenagers from buying virtual gifts on platforms like Kuaishou and limit any user’s total spending. The regulations also tighten controls on live streaming e-commerce, where video hosts promote products to buyers, a growing business for Kuaishou.
Kuaishou’s competitors, including TikTok, have faced controversy over their operations and data usage amid tensions between the U.S. and China. In December, the deadline for ByteDance to restructure TikTok’s operations in the United States passed without an agreement, and the company continues to negotiate on the status of the short video application in the country.
Kuaishou’s app had about 262 million daily viewers in the first nine months of last year, who spent an average of 86 minutes a day watching videos. The company reported an operating loss of Rmb9bn over Rmb41bn in sales during the same period.
The company has invested heavily to bring in new users as it faces an increasingly crowded online video market in China.
Key investors in the Kuaishou IPO include asset managers Invesco and Fidelity, as well as Singapore state investors Temasek and GIC, which together will buy up to $ 2.5 billion worth of shares over a six-month blackout period.
“The quality and size of key investors are some of the highest we have seen in Chinese technology companies reaching the market,” said a banker about the business. “This shows that the market is still clamoring for more liquidity in large, high-growth technology companies.”
Kuaishou will use the resources for research and development, acquisitions and investments and expanding its ecosystem, according to the term sheet.
Tencent holds an approximately 22 percent stake in Kuaishou after leading a $ 3 billion financing round last year. As the number two player in China’s online video market after Douyin – the Chinese version of TikTok – “Kuaishou is less susceptible to political noise”, according to a banker who worked at the IPO.
Kuaishou hired Bank of America, China Renaissance and Morgan Stanley to work on the IPO.
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