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Kuaishou Technology, the short-video platform backed by Tencent, will offer its shares at a maximum price of HK$93 each, as it aims to raise up to HK$38.6 billion (US$5 billion) in Hong Kong’s biggest initial public offering for 14 months.
The upcoming sale could value Beijing-based Kuaishou at above US$50 billion, bigger than its competitor Bilibili’s US$44 billion capitalisation and iQiyi at US$16.6 billion. It would be Hong Kong’s second-largest flotation, after Alibaba Group Holding’s US$13 billion secondary listing in November 2019.
Kuaishou will be the first of three video-sharing applications to tap capital in Hong Kong. Nasdaq-listed Bilibili is aiming to raise capital in Hong Kong via a secondary listing in the first quarter, while Douyin is waiting in the wings to file its fundraising plan.
Kuaishou is likely to start its Hong Kong public offering next Tuesday, with the final pricing to be set around January 28 to 29, in time for its shares to commence trading in early February before the start of the Lunar New Year holiday, according to bankers familiar with the schedule.
The HK$93 is the top end of a range for the final share price, though the bankers declined to reveal the bottom end of the scale.
The rush for capital belies the struggle by video-sharing apps to turn their customers into sustainable profits.
Kuaishou, which has amassed 263.8 million in daily average active users since its establishment nine years ago, reported 97.4 billion yuan (US$15 billion) in losses in the first nine months of 2020, a deterioration from 1.6 billion yuan in the same period a year earlier, according to its financial filings.
“We are actively developing additional monetisation opportunities to diversify our revenue streams through online games, online knowledge-sharing and other products and services,” the company said in its preliminary listing document to the Hong Kong stock exchange.
China’s population of mobile internet users jumped to 873 million in 2019, the world’s largest digitally connected community. But internet access and content are also among the most heavily regulated in the world, which potentially restricts the gains web-based platforms can make.
To bolster its profitability, Kuaishou said it is close to completing its cash purchase of an online payment service provider for 850 million yuan, without divulging the name of the acquisition target.
The foray into e-payment matches a similar expansion by Douyin, the Chinese version of ByteDance’s video-sharing app Tiktok, and a Kuaishou competitor. Douyin is poised to launch its Douyin Pay service through its exclusive right to hand out digital red packets, laisee in Hong Kong or hongbao in Mandarin during the Spring Festival Gala on China’s state broadcaster CGTN.
The joint sponsors for Kuaishou’s IPO include Morgan Stanley, Bank of America and China Renaissance.
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