Tip Sheet: What to Know About Kuaishou and Its Dazzling $5.4 Billion IPO
Kuaishou Technology, operator of a leading short-video platform, is set to debut Friday in Hong Kong in one of the most dazzling tech listings in recent years.
The 10-year-old startup priced its shares at the top of an indicated range, raising $5.4 billion in the world’s biggest internet IPO since the $8.1 billion U.S. share sale of Uber Technologies Inc. in May 2019.
Investors showed a voracious appetite for the company’s shares during a presubscription period that started Jan. 26. Kuaishou’s retail share offering was overbooked 1,204 times, and its international offering was 39 times oversubscribed. Investors placed a record $162 billion of share orders, a record-breaking investor frenzy last seen for Ant Group Co. Ltd.’s suspended offering in November.
If underwriters exercise their overallotment option, Kuaishou’s offering would become the Hong Kong’s largest IPO since August 2018.
Kuaishou, which means “fast hand” in Chinese, is the primary competitor to TikTok’s Chinese twin Douyin, although it remains little known outside China. Founded by former Google employee Su Hua and HP software engineer Cheng Yixiao, the app started as a platform for Chinese users to share animated GIFs with friends and then moved into the short-video format and added livestreaming functions.
As one of the first short-video platforms to grab capital market attention, Kuaishou offers an important case study for the booming industry.
Here are some key facts and figures about Kuaishou and its IPO.
• Kuaishou had 305 million daily active users as of September. That was more than Twitter’s 187 million in the third quarter and Snapchat’s 249 million. Domestic rival Douyin owned by ByteDance Ltd. has more than 600 million.
• Users spend an average of 86 minutes a day on Kuaishou. They create content, share and livestream. The platform hosts 2.34 trillion short video and livestreaming likes, shares and comments.
• Gross merchandise value sold on Kuaishou totaled 204.1 billion yuan ($31.6 billion) in the first three quarters of 2020. Kuaishou makes money primarily through sales of virtual items, online marketing services and commissions from partnerships with e-commerce companies such as JD.com and Alibaba Group.
• Revenue in the nine months through Sept. 30 totaled 40.7 billion yuan, more than 60% of it from livestreaming. The company’s operating loss was 8.9 billion yuan for the period.
• Kuaishou raised $5.4 billion in the IPO, behind only Uber’s $8.1 billion U.S. share sale in 2019.
• The IPO gives Kuaishou a valuation of $61 billion.
• Kuaishou priced its shares at HK$115 ($14.84), at the top of a marketed range.
• Kuaishou received 1.42 million applications from individual investors, equivalent to almost one in every five Hong Kong residents.
Co-founder, chairman and CEO
Co-founder, executive director and CPO
|Tencent||21.57%||Largest institutional shareholder|
|5Y Capital||16.66%||Formerly Morningside, one of Kuaishou's earliest shareholders|
|DCM||9.23%||a U.S. venture capital firm|
|DST||6.43%||a Russian venture capital firm|
|Other institutional shareholders||8.82%||
Institutional shareholders own 72.84% shares in total
Source: company’s prospectus
Who will get rich
• Company founders Su and Cheng will each be worth more than $5.5 billion, according to the Bloomberg Billionaires Index.
• Kuaishou counts Tencent Holdings as the key strategic investor with 21.6%. Other investors include 5Y Capital, DCM and DST Global.
• The offering attracted 10 cornerstone investors, including the Capital Group Inc., Government of Singapore Investment Corp. (GIC Pte.), Temasek Holdings Pte. Ltd., Fidelity Investments Inc., BlackRock Inc. and Canada Pension Plan Investment Board (CPP). The investors split $2.5 billion of shares and committed to holding the shares for six months.
• Co-founder Su (click here for personal background) previously worked as an engineer at Google China and Baidu, Inc. and has served as Kuaishou’s chairman and CEO. He will be one of two executive directors on the board.
• Co-founder Cheng (personal background) was a software engineer at HP and later joined Renren Inc. He is the company’s chief product officer and will be the other executive director.
• The nine-member board also includes four nonexecutive directors representing major investors: Li Zhaohui (personal background), vice president and head of investment and M&A at Tencent; Zhang Fei, a partner at 5Y Capital; Shen Dou, executive vice president of Baidu Inc.; and Lin Xinhe, founding partner of DCM China.
Contact reporter Han Wei (email@example.com) and editor Bob Simison (firstname.lastname@example.org).
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