The operator of China’s most popular video service, Kuaishou Technology, is seeking to raise as much as $5.4 billion in the world’s biggest internet IPO since Uber Technologies Inc’s $8.1 billion U.S. share sale in May 2019.
The short video startup, backed by Tencent Holdings Ltd, is selling 365 million shares at HK$105 to HK$115 each, according to Bloomberg News. The company will start taking investor orders from Monday through January 29 and is slated to list on February 5 in Hong Kong.
This IPO will also give another boost to Hong Kong’s already-hot capital market and could become Asia’s largest since Budweiser Brewing Co APAC Ltd’s $5.8 billion floats almost two years ago.
Kuaishou’s monthly active users on its main app had reached 481.4 million while average daily time spent had crossed the 100-minute mark in 2021, as revealed by the executives on Monday.
“We are exploring live-streaming in local life services and knowledge sharing,” the 38-year-old former Google engineer and co-founder Su told investors on a conference call. “We’ll also try to use short videos and live-streaming, both based on the fan-host relationship, to transform one industry after another. That’s a driving force for our future growth.”
Kuaishou which means “fast hand,” is one of China’s biggest internet success stories of the past decade. It is also a part of a generation of startups that thrived with backing from Tencent. The format of live-streaming and bite-sized videos which is thriving around the world was co-created in 2013 along with TikTok parent ByteDance. Kuaishou’s imminent debut could test investor appetite for its far larger rival, which was last valued at $180 billion.
The offering of Kuaishou has attracted 10 cornerstone investors, who agreed to subscribe for $2.45 billion of stock, based on the mid-point of the marketed range. The lineup includes The Capital Group, Temasek Holdings Pte, GIC Pte, BlackRock Inc and Abu Dhabi Investment Authority. The cornerstone investors have agreed to hold stock for six months in exchange for early, guaranteed allocation.
The valuation of Kuaishou could more than double after its Hong Kong IPO. Top-end pricing will value the Chinese firm at $60.9 billion, up from the $28.6 billion it achieved in a funding round last year, according to Pitchbook. Even at the low end of the range, Kuaishou will still be valued at $55.6 billion.
Tencent has about a 21.6% stake in Kuaishou, and other backers include venture capital firms DCM, DST Global and Sequoia Capital China, the prospectus shows. Shares in Tencent jumped as much as 6.4% to an all-time high in early Monday trading in Hong Kong. Morgan Stanley, Bank of America Corp and China Renaissance are joint sponsors of the deal.