WeChat Marketer Banks on Tencent Ties for IPO

Marketing-solutions provider Weimob Inc. has filed for an initial public offering (IPO) in Hong Kong, tapping into its strong ties with Tencent Holdings Ltd. for capital.

The company plans to use 50% of the proceeds to enhance research and development capabilities and expand its products offerings, according to a draft prospectus to the city’s stock exchange regulator on Monday. The filing didn’t reveal the offering price range or fundraising size.

Founded in 2013, Shanghai-based Weimob delivers cloud-based marketing services to small and midsize businesses (SMBs), mostly over Tencent’s WeChat, China’s largest social media platform with 1 billion active users a month.

Weimob’s rise comes as social media has become the venue that businesses use to reach out to consumers for product sales and brand exposure.

The company has proclaimed its ambition to become China’s version of Salesforce.com Inc., a U.S. sales and marketing software giant.

Weimob is currently the largest third-party service provider on WeChat for SMBs by revenue and by the number of paying merchants, according to consultancy Frost & Sullivan. It had 2.6 million registered merchants and over 51,000 paying clients as of December. These clients cover various sectors that include real estate, retail to cosmetics.

In addition to major partnerships with Tencent’s social media platforms that also include QQ, QZone and Tencent News, Weimob also works with search engine giant Baidu Inc. and with Zhihu, another Tencent-backed question-and-answer sharing platform similar to Quora.

“We have benefited significantly and expect to continue doing so from Tencent’s extensive user base and strong brand,” which give Weimob credibility and a broad marketing reach, the prospectus said.

The company turned into the black last year, posting a net profit of 2.6 million yuan ($380,000) from a net loss of 80.9 million yuan the previous year, the prospectus said.

Weimob recently raised over $320 million from a group of investors that include Tencent and Singapore’s sovereign wealth fund GIC Pte. Ltd. That funding pushed Weimob’s total fundraising to over 5 billion yuan, according to Chinese data provider Qichacha.

Weimob is the latest of Chinese tech companies tapping the capital in Hong Kong to raise funds recently. Last month, online real estate company E-House filed an IPO to raise as much as HK$5.7 billion ($726,000).