(Yicai Global) May 11 -- In response to market rumors on May 10 that Shanghai Zhengda Ximalaya Network Technology Co. will list on the Hong Kong Stock Exchange, the company told Tencent Holdings Ltd.'s online media arm it has no initial public offering plan for the time being.
Qingdao City Media Co. [SHA:600229] said it will subscribe for the fund Grand Everlasting Limited Partnership with its own finances of up to USD40 million. The US-dollar fund will invest in a domestic enterprise in the mobile internet audio industry, City Media said.
The company will acquire about 1 percent of the target company's equity, per the statement. Based on this calculation, the target company's valuation may reach USD4 billion.
The target company may be Ximalaya, and the latest move will re-establish a variable interest entity (VIE) -- in which an investor has a controlling interest, but one not based on majority voting rights -- structure for it to realize its Hong Kong Stock Exchange listing plan, City Media also revealed. Ximalaya has completed six rounds of financing, public data show. Ximalaya concluded its Series-C financing of RMB60 million, invested in by City Media, in June.
Ximalaya is a well-known Chinese audio-sharing platform which introduced its mobile app in March 2013. The number of the firm’s users exceeded 400 million as of September, company executives said. It ranked seventh among audio entertainment apps, with over 34.3 million monthly active users. It placed first in the mobile radio app category in July, per statistics from market researcher Analysys Ltd.
Ximalaya initially wanted to land on US capital markets through the VIE structure, but China's cabinet the State Council promulgated the Directory of Foreign Investment Industry Guidance, however, in 2015, which included Ximalaya on the list of companies prohibited from foreign investment, and so it ended up nixing its plans for a US stock listing.
Editor: Ben Armour