(Yicai Global) Jan. 26 -- Kuaishou Technology, the firm behind TikTok’s main rival in China, intends to raise as much as HKD42 billion (USD5.4 billion) in Hong Kong, making it the city’s biggest share sale since Alibaba Group Holding more than a year ago.
The short video platform operator will sell 365 million shares in a marketed range of between HKD105 and HKD115 (USD13.55 and USD14.84) each, according to the terms of the initial public offering.
It would be Hong Kong’s largest flotation since Alibaba’s secondary listing in November 2019, and if Kuaishou fully exercises the greenshoe option, which allows underwriters to sell more shares than originally planned, it would raise USD6.2 billion, giving the Beijing-based company a market value of over USD60 billion.
Kuaishou will announce the final pricing on Feb. 4, the day before it is scheduled to list on the Hong Kong Stock Exchange.
Despite the stellar expectations, Kuaishou remains unprofitable and expects its net loss to widen further this year due to increased spending on sales, marketing and research and development, the firm said earlier this month.
In the 11 months to Nov. 30, the company ran up a deficit of CNY9.4 billion (USD1.5 billion), up from CNY7.2 billion at the end of September and CNY6.3 billion for the first half. It earned CNY52.5 billion (USD8.1 billion) in revenue, with a gross profit margin of 39.9 percent.
Kuaishou’s e-commerce gross merchandise volume was CNY332.6 billion (USD51.4 billion) as of Nov. 30, down 21.5 percent from a year earlier. The platform’s average daily active users rose to 264 million in the first 11 months from 262 million in the first nine, but monthly active users fell to 481 million from 483 million.
Kuaishou is using a dual-class share structure for the listing. A shares are sold to external investors and B shares to management. A shares are given one vote per share and B shares hold N votes per share. This enables management to retain control and makes it difficult for external investors to have a say.
About 35 percent of the IPO proceeds will be used for business development, such as improving the quality and diversity of content on the platform, developing new interactive functions to cultivate fans, providing more online marketing solutions and expanding the e-commerce platform.
About 30 percent will go to research and development, while 25 percent will be used for selective investment in products, services and businesses that complement Kuaishou’s business. The rest will supplement working capital.
Editor: Kim Taylor