Kingsoft Cloud Seeks $100 Million Funding Boost From U.S. IPO
Chinese cloud computing services provider Kingsoft Cloud Holdings Ltd. has filed for an IPO in the U.S. to raise as much as $100 million, making it the latest company in the sector to tap into public capital markets to fund its expansion.
The money raised will be used mainly to upgrade and expand its infrastructure and increase investment in technology and product development, the company said in a prospectus filed to the U.S. Securities and Exchange Commission on Friday.
The filing comes three months after a similar cloud service provider, UCloud Technology Co. Ltd., was listed (link in Chinese) in Shanghai. Another Kingsoft Cloud rival, QingCloud, is set to go public after its application to list in Shanghai was approved by regulators early this month.
Kingsoft Cloud was founded in 2012 and its largest shareholder is Hong Kong-listed Kingsoft Corp. Ltd., whose chairman is Chinese entrepreneur and Xiaomi-founder Lei Jun. In 2019, Kingsoft Cloud posted a net loss of 960 million yuan ($136 million) on revenues of 3.96 billion yuan.
Citing a third-party data provider, Kingsoft Cloud said in its prospectus that market for cloud services in China’s internet sector was expected to be worth 217.5 billion yuan by 2024, up from 53.8 billion yuan in 2019.
The size of the country’s cloud market for traditional enterprises and public service organizations is expected to grow even larger, growing from last year’s 108 billion yuan to 345.9 billion in 2024, according to the prospectus.
However, China’s cloud market is increasingly dominated by several big tech companies, including Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Huawei Technologies Co. Ltd.
In the second half of 2017, Kingsoft Cloud had a market share of 6.5% in the key “infrastructure-as-a-service” (IaaS) sector, ranking third only after Alibaba and Tencent, according to data from industry consultancy IDC.
However, last year its IaaS market share ranking in China fell to sixth, overtaken by China Telecom, Amazon and Huawei.
Amid fierce competition, Kingsoft Cloud has been operating business with substantial losses for years. Its adjusted net loss of 960 million yuan in 2019 was up from 2017’s 653 million yuan, and 2018’s 864 million yuan, according to the prospectus.
Kingsoft Cloud’s clients are concentrated in the internet and finance sectors. Some of its big-name clients include short-video platform operator ByteDance and video streaming service provider Bilibili.
However, its revenue is reliant on just a few firms, including smartphone-maker Xiaomi Corp. which contributed 27%, 25% and 14% of its revenues in the past three years.
Contact reporter Mo Yelin (firstname.lastname@example.org)
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