(ATF) – Chinese shortform video platform Kuaishou Technology hopes to raise between $4.95 billion and $5.42 billion in an initial public offering (IPO) that will be the largest in Hong Kong for more than a year, according to its term sheet.
The online video site, backed by Tencent Holdings, will price 365.2 million shares at between HK$105 and $HK115 each. There is a so-called greenshoe option to sell a further 54.78 million shares in the 30 days after listing that could take the total to $6.2 billion.
The IPO will value Kuaishou at between $55.6 billion and $60 billion. If the extra shares are sold it would take the market capitalisation to $56.3 billion to $61.7 billion.
Analysts are upbeat about the company’s prospects. “We believe most of the incremental growth in China’s live streaming industry will be driven by the two major short-form video platforms, Douyin and Kuaishou,” says Carlton Lai of Daiwa Capital Markets in Hong Kong.
But Kuaishou could have the upper hand, he adds, when it comes to vendors selling products to users on the platform. “Its more mass-market user base allows a broader range of products to be sold.”
MAXIMISING USER EXPERIENCE
However, Lai noted that Kuaishou is “much more patient in driving advertising revenue than Douyin”. Kuaishou is more focused on maximising user experience by limiting ads to eight per day; a lot fewer than Douyin,” he noted.
Ten shareholders, led by Capital Group, have become cornerstone investors, accounting for about $2.45 billion.
If Kuaishou raises $6.2 billion, it will surpass Budweiser Brewing Company’s $5.75 billion IPO in September 2019 and be the biggest listing since China Tower raised $7.4 billion in August 2018. Kuaishou could be the largest tech IPO since Uber Technologies raised $8.1 billion in May 2019.
The final price of the IPO will be set on Friday and shares will start trading on the Hong Kong exchange on February 5.