TikTok rival Kuaishou to raise up to $ 6.3 billion in Hong Kong IPO

Chinese live-streaming and short video group Kuaishou set to raise up to $ 6.3 billion in initial Hong Kong public offering to test investor appetite for the industry technology as it faces increasing regulatory scrutiny.

The deal could value Kuaishou, which competes with ByteDance’s TikTok, to the tune of $ 61.7 billion and would be the largest tech IPO since ride-sharing company Uber went on the market in 2019.

The listing will rise between $ 4.9 billion and $ 5.4 billion, but it could rise to $ 6.3 billion if bankers exercise an over-allotment option to increase its size, according to a term sheet seen by the Financial Times. The stock price is expected to be between HK $ 105 (US $ 13.55) and HK $ 115 (US $ 14.84) ​​on Friday and start trading on February 5.

The IPO comes as Chinese tech companies face an increasingly uncertain regulatory environment. The $ 37 billion Hong Kong and Shanghai IPO of payment firm Ant Group was halted by Beijing at the last minute in November, while its e-commerce subsidiary Alibaba is subject to a antitrust investigation.

Kuaishou, which is backed by Chinese internet group Tencent, derives most of its revenue from users who send virtual gifts to live broadcast hosts. The company takes about half the price of the gift, which can range from a few cents to 2,000 Rmb (US $ 309).

Live streaming rules announced in November prohibit teens from purchasing virtual gifts on platforms like Kuaishou and limit a single user’s total spending. The regulations also tighten controls over live e-commerce, where video hosts promote products to buyers, a growing business for Kuaishou.

The market continues to demand more liquidity from large, high-growth tech companies

Kuaishou’s competitors, including TikTok, have faced controversy over their operations and use of data amid tensions between the United States and China. In December, the deadline for ByteDance to restructure TikTok’s U.S. operations was passed without a deal, and the company remains in negotiations over the status of the short video app in the country.

Kuaishou’s app attracted around 262 million daily viewers in 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 RMB 9 billion out of RMB 41 billion in revenue during the same period.

The company has spent a lot to attract new users in the increasingly crowded online video market in China.

The main investors in the Kuaishou IPO include asset managers Invesco and Fidelity, as well as Singaporean state-backed investors Temasek and GIC, who will together buy shares worth up to 2.5 billion. of dollars with a six-month lock-in period.

“The quality and size of the major investors is among the highest that we have seen among Chinese technology companies to come into the market,” a banker said of the transaction. “This shows that the market is always asking for more liquidity from large, high growth technology companies.”

Kuaishou will use the funds for such purposes as research and development, acquisitions and investments, and expanding its ecosystem, according to the terms sheet.

Tencent has an approximate 22% stake in Kuaishou after leading a $ 3 billion fundraising round last year. As number two in China’s online video market after Douyin – the Chinese version of TikTok – “Kuaishou is less sensitive to political noise,” according to a banker working on the IPO.

Kuaishou hired Bank of America, China Renaissance and Morgan Stanley to work on the IPO.