China's Kuaishou aims to raise up to US$5.42b in HK IPO

Bloomberg graphic on Chinese online video company Kuaishou Technology's IPO in HK.

HONG KONG: Chinese online video company Kuaishou Technology is aiming to raise $4.95 billion to $5.42 billion in an initial public offering (IPO) that will be the largest in Hong Kong for more than a year, according to a term sheet reviewed by Reuters.

The online video site, backed by Tencent Holdings Ltd, will price 365.2 million shares at between HK$105 and $HK115 apiece, the term sheet shows.

Kuaishou did not immediately respond to a request for comment.

There is a so-called greenshoe option to sell a further 54.78 million shares in the 30 days after listing that could take the total amount raised up to $5.7 billion to $6.2 billion.

The IPO will value Kuaishou at between $55.6 billion and $60 billion, pre greenshoe, the term sheet showed. If the extra shares are sold it would take the market capitalisation to $56.3 billion to $61.7 billion.

The company was valued at $30 billion after it raised $3 billion from backers in late 2019.

Ten shareholders, led by Capital Group, have become cornerstone investors accounting for about $2.45 billion, the term sheet showed.

If Kuaishou raises $6.2 billion, it will beat the most recent largest IPO in Hong Kong which was Budweiser Brewing Company's $5.75 billion IPO in September 2019.

Above that, China Tower Corp raised $7.4 billion in August 2018. Kuaishou's deal, at the top end, will be the largest IPO in the world of a digital company since Uber Technologies raised $8.1 billion in May 2019.

Kuaishou, which means "fast hand" in Chinese, operates apps that allow user-uploaded videos as well as live-streaming programs through which vendors can promote consumer products.

The final IPO price will be set on Friday and Kuaishou shares will start trading on the Hong Kong exchange on February 5.

Kuaishou reported an adjusted revenue of 40.6 billion yuan ($6.27 billion) in the nine months to September 30 last year and an adjusted loss of 7.2 billion yuan, according to its filings to the Hong Kong exchange. "The company used to make a profit but it ramped up its sales and marketing spending in 2019 and went into a loss," said Sumeet Singh, head of research at Aequitas, who publishes on the Smartkarma platform.

"This spending should normalise over the next few years and it will be back in the black, competition permitting," he said. "In our view, looking at where domestic and international peers are trading Kuaishou still offers decent upside from the IPO price." ($1 = 6.4785 Chinese yuan renminbi) - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Did you find this article insightful?


Next In Business News

MyEG posts RM75.5mil net profit in Q4
ANALYSIS: Top Glove bets on pandemic boom to propel ambitious US$1.9bil HK listing
Datasonic eyes Vietnam e-passport opportunity�
Yinson's unit bags RM1.5bil solar project in India�
Deloitte to pay RM324mil in settlement over 1MDB and SRC�
BIMB Investment launches Makmur myWakaf Fund
KLCI extends gains, closes 18 points higher
MISC’s ethane carrier Seri Everest delivers cargo in China
GlobalFoundries pours US$1.4b into fab expansion
Oil rises as U.S. vaccine progress raises demand expectations

Stories You'll Enjoy