May 13, 2020 01:25 PM

Chinese Cybersecurity Firm Seeks to Raise $634 Million in STAR Market IPO

(Deal Street Asia) — About seven months after it raised 1.5 billion yuan ($210 million), Chinese cybersecurity major Qi An Xin Group has filed a prospectus with the Nasdaq-style STAR Market on Monday to move towards an initial public offering for 4.5 billion yuan.

Qi An Xin’s listing plan comes after the company raised 1.5 billion yuan in a pre-IPO round at a valuation of 23 billion yuan. Boston-based investment bank IDG Capital, Beijing-based private equity firm Xicheng Jinrui, China’s 10 Fund, Hong Kong-listed furniture stores firm Red Star Macalline, and other investors participated in the round.

Beijing-based Qi An Xin was founded in 2014 as a controlling subsidiary of Chinese internet security firm Qihoo 360, which is widely known in China for its namesake antivirus software. The company was spun out from Qihoo 360 in 2016 to focus on offering internet security services and solutions for corporate clients.

In April 2019, Qihoo 360 announced to transfer all shares in Qi An Xin, which accounted for nearly 22.6% of its total equity, to two firms affiliated with Chinese state-owned telecom equipment provider China Electronics Corp. for 3.73 billion yuan. The deal was marked the formal separation of the two once closely attached companies.

Qi An Xin uses AI, big data, and safety operation technologies to primarily provide cybersecurity products and services to corporate clients including state-owned enterprises, commercial banks and government departments in China.

The company registered about 821 million yuan, 1.82 billion yuan, and 3.15 billion yuan in revenues from 2017 to 2019 with a compound annual growth rate of almost 96%. Its net losses declined 42% from 952 million yuan in 2018 to 552 million yuan in 2019, according to its prospectus.

Chairman and CEO Qi Xiangdong directly owns nearly 25.9% of the shares in Qi An Xin, apart from a 12.5% stake that he holds indirectly through two companies. China Electronics is the second-largest shareholder with a 38.3% stake, while IDG Capital, private equity fund CICC Capital, and Beijing-based venture capital firm AlphaX Partners also own equity interests in the firm.

Proceeds from the IPO will be invested in technological innovations in the cybersecurity industry, which includes cloud and big data security, Internet of Things, and zero trust architecture, among others.

This story was originally published by Deal Street Asia

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