Chinese rival of TikTok Kuaishou Technology has received the green-light from the Stock Exchange of Hong Kong to move forward with its IPO that could raise around $5 billion.
The Tencent-backed short-video app intends to start “gauging demand" for the share sale as early as next week and will eye a valuation of $50 billion, as reported by Bloomberg today, citing a person familiar with the deal.
At $50 billion, Kuaishou would exceed the valuation of Elon Musk’s rockets and spacecraft company SpaceX, becoming the world’s third-largest private company, according to CB Insights. In its latest funding round in February 2020, Kuaishou was worth $28.6 billion by Pitchbook.
In addition, the $5 billion share sale would become Hong Kong’s largest IPO since the Asian unit of brewing giant Anheuser-Busch InBev (NYSE: BUD) known as Budweiser Brewing Company (HKEX: 01876) raised $5.8 billion in 2019, data compiled by Bloomberg shows. The largest IPO in 2020 was conducted by JD Health (HKEX: 06618), which raised $3.48 billion.
In the fourth quarter, multiple media reports said that TikTok parent ByteDance was looking to list some of its business in Hong Kong. For now, Kuaishou looks like it’s on track to beat its larger short video rival in the IPO race.
Kuaishou, founded in 2011, was originally established as a product tool for making animated gifs. By 2013, Kuaishou was transformed into a short-video social platform, which was designed to target users in lower-tier cities. Now, it has expanded its presence to bigger cities, offering content to teenagers including video games and lip-syncing pop songs.
As of June, Kuaishou’s monthly active users hit 776 million.
However, the company has struggled a bit with profitability. In the first half of 2020, Kuaishou’s losses widened to 6.8 billion yuan versus 268.7 million yuan in the same period in the preceding year.
Chinese gaming giant Tencent (OTC: TCEHY; HKEX: 00700) holds around a 22% stake in Kuaishou. Kuaishou’s other backers include venture capital firms DST Globa, DCM, and Sequoia Capital China, according to its prospectus.
Morgan Stanley, China Renaissance, and Bank of America are the joint sponsors on the deal.