Caixin
Jul 18, 2019 06:03 AM
BUSINESS & TECH

Tencent-Backed Esports Live-Streamer Douyu Makes Trading Debut

The value of China’s esports market has more than tripled since 2015 to touch 112.8 billion yuan last year, around 7.1 times that of the U.S. market. Photo: VCG
The value of China’s esports market has more than tripled since 2015 to touch 112.8 billion yuan last year, around 7.1 times that of the U.S. market. Photo: VCG

Chinese live-streaming platform Douyu International Holdings Ltd. opened down before rebounding in its trading debut on Nasdaq Wednesday after raising $775 million in its initial public offering.

Douyu, China’s largest game-centric live-streaming platform, ended flat in its first trading day at $11.50, same as its IPO price. The company opened down 4.2% at $11.02 per American depository shares (ADR) and plunged as much as 0.9% in the morning before bouncing back.

Wuhan-based Douyu said Tuesday it sold 44.9 million ADRs at the bottom of its projected range as existing investors sold 22.5 million additional shares. Every 10 ADSs represent one ordinary share.

With a name that literally means “fighting fish” in Chinese, DouYu is valued at about $3.7 billion at the bottom-end pricing. Its listing was the biggest for a Chinese company in U.S. since Tencent Music Entertainment Group raised $1.07 billion in December, according to Bloomberg.

China’s esports market is expanding rapidly. The value of the market has more than tripled since 2015 to touch 112.8 billion yuan last year, around 7.1 times that of the U.S. market, according to consultancy iResearch. Analysts say they expect China’s esports market to more than double from its 2018 level to 247.8 billion yuan by 2023, with monthly active users rising to 400 million from 255 million in the same period.

The Twitter-like live-streaming platform, which focuses on esports, is 40.1% owned by internet giant Tencent Holdings Ltd. as the biggest shareholder. Douyu previously filed in April with the U.S. Securities and Exchange Commission (SEC) to raise as much as $500 million on the New York Stock Exchange but called off that plan citing poor market conditions.

In May 2018, Douyu’s biggest competitor, Huya Inc., also backed by Tencent, raised $180 million in a New York Stock Exchange IPO. Huya was priced at $12 a share, and the stock closed at $22.87 Wednesday, down 4.99%.

Founded in 2014, Douyu claimed to have 281 million registered users at the end of March, including 159.2 million monthly active users, according to its IPO filings. The number of monthly active users grew 26% from a year earlier.

The company said it has exclusive streaming rights to 29 major tournaments in China, including League of Legends, PlayerUnknown’s Battlegrounds and DOTA2.

Douyu reported profit of $2.7 million for the first three months of 2019, with revenue of $222 million, according to the IPO prospectus. It booked a $127.4 million net loss in 2018.

Contact reporter Han Wei (weihan@caixin.com)

David Kirton contributed to the story


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