Chinese livestreaming and short video group Kuaishou is set to raise up to $6.3bn in a Hong Kong initial public offering in a test of investor appetite for China’s tech sector as it faces growing regulatory scrutiny.
The deal could value Kuaishou, which competes with ByteDance’s TikTok, at up to $61.7bn and would be the largest tech IPO since ride-hailing company Uber went to market in 2019.
The listing will raise between $4.9bn and $5.4bn, but that could rise to $6.3bn if bankers exercise an overallotment option to increase its size, according to a term sheet seen by the Financial Times. Shares are expected to price on Friday between HK$105 (US$13.55) and HK$115 (US$14.84) and begin trading on February 5.
The flotation comes as Chinese tech companies face an increasingly uncertain regulatory environment. The $37bn Hong Kong and Shanghai IPO of payments firm Ant Group was halted by Beijing at the last minute in November, while its ecommerce affiliate Alibaba is subject to an antitrust investigation.
Kuaishou, which is backed by Chinese internet group Tencent, earns most of its revenues from users sending virtual gifts to livestreaming hosts. The company takes roughly half of the gift price, which can range from a few cents to Rmb2,000 (US$309).
Livestreaming rules announced in November ban teenagers from purchasing virtual gifts on platforms such as Kuaishou and limit total spending by any single user. The regulations also tighten controls on livestreaming ecommerce, where video hosts promote goods to shoppers, a growing business for Kuaishou.
Kuaishou competitors including TikTok have faced controversy over their operations and use of data amid tensions between the US and China. In December, a deadline for ByteDance to restructure TikTok’s US operations passed without a deal, and the company remains in negotiations about the short video app’s status in the country.
Kuaishou’s app had about 262m daily viewers in the first nine months of last year, who on average spent 86 minutes per day watching videos. The company reported an operating loss of Rmb9bn on Rmb41bn in sales during the same period.
The company has spent heavily on bringing in new users as it faces an increasingly crowded online video market in China.
Cornerstone investors in Kuaishou’s IPO include asset managers Invesco and Fidelity as well as Singaporean state-backed investors Temasek and GIC, which will together buy shares worth up to $2.5bn with a six-month lock-up period.
“The quality and size of cornerstone investors are some of the highest we have seen in Chinese tech companies to come to market,” said one banker on the deal. “It shows that the market is still crying out for more liquidity in sizeable, high-growth tech companies.”
Kuaishou will use the funds for purposes including research and development, acquisitions and investment and expanding its ecosystem, according to the term sheet.
Tencent holds a roughly 22 per cent stake in Kuaishou after leading a $3bn 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 one banker working on the IPO.
Kuaishou has hired Bank of America, China Renaissance and Morgan Stanley to work on the IPO.
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