Chinese online video company Kuaishou Technology is aiming to raise $4.95 billion to $5.42 billion in an initial public offering (IPO) that will be the largest in Hong Kong for more than a year, according to a term sheet reviewed by Reuters.
The online video site, backed by Tencent Holdings Ltd, will price 365.2 million shares at between HK$105 and $HK115 apiece, the term sheet shows.
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 amount raised up to $5.7 billion to $6.2 billion.
The IPO will value Kuaishou at between $55.6 billion and $60 billion, pre greenshoe, the term sheet showed. If the extra shares are sold it would take the market capitalisation to $56.3 billion to $61.7 billion.
The company was valued at $30 billion after it raised $3 billion from backers in late 2019.
Ten shareholders, led by Capital Group, have become cornerstone investors accounting for about $2.45 billion, the term sheet showed.
If Kuaishou raises $6.2 billion, it will beat the most recent largest IPO in Hong Kong which was Budweiser Brewing Company’s $5.75 billion IPO in September 2019.
Above that, China Tower Corp raised $7.4 billion in August 2018. Kuaishou’s deal, at the top end, will be the largest IPO in the world of a digital company since Uber Technologies raised $8.1 billion in May 2019.
Kuaishou, which means “fast hand” in Chinese, operates apps that allow user-uploaded videos as well as live-streaming programs through which vendors can promote consumer products.
Kuaishou reported an adjusted revenue of 40.6 billion yuan ($6.27 billion) in the nine months to September 30 last year and an adjusted loss of 7.2 billion yuan, according to its filings to the Hong Kong exchange.
“The company used to make a profit but it ramped up its sales and marketing spending in 2019 and went into a loss,” said Sumeet Singh, head of research at Aequitas, who publishes on the Smartkarma platform.
“This spending should normalise over the next few years and it will be back in the black, competition permitting,” he said.
“In our view, looking at where domestic and international peers are trading Kuaishou still offers decent upside from the IPO price.”