China's Top Audio App Ximalaya Drops US Listing Plan

The Tencent-backed company now expects to raise more IPO capital than it hoped - but in Hong Kong.
Sep. 10, 2021 21:05
China's Top Audio App Ximalaya Drops US Listing Plan

(CapitalWatch, Sept. 10, Hong Kong) China's top audio platform Ximalaya has given up on its planned listing in New York and has turned to Hong Kong.

The company, which in the spring pursued an initial public offering on the New York Stock Exchange, is withdrawing its application from the U.S. SEC and prepares to file with the Stock Exchange of Hong Kong next week, as Reuters reported Friday. Chinese medium Sina Tech has said that the company had registered Xima Holdings Ltd. in Hong Kong late last month.

Reuters said the Hong Kong float would exceed the $500 million Ximalaya planned to raise in the United States. The deal is expected to complete by the year-end.

The news follows months of uncertainty for Chinese listings amid Beijing's crackdown on its independent tech giants. The Chinese government has been issuing stricter laws on the transfer of data overseas and cyber protection – and new guidelines for overseas listings are in the works. The tighter laws on overseas fundraisings had put a stop to Chinese IPOs in New York since early July; a number of firms counting down to their U.S. offerings were left hanging.

As to Ximalaya, Reuters reported earlier that the Cyberspace Administration of China (CAC) had pushed the app to pursue a Hong Kong offering instead.

Backed by Tencent Holdings (OTC: TCEHY; HKEX: 0700), Ximalaya ranks as the leading audio content app among all Chinese audio platforms in several parameters, according to China Insights Industry Consultancy (CIC). Providing audio content for listeners across all age groups, the company counted 250 million average monthly active users in the first quarter of 2021 across all its channels, as it said in the prospectus it is now withdrawing.

Other backers are Baidu (Nasdaq: BIDU; HKEX: 9888), Sony Music Entertainment, and General Atlantic. In addition, Ximalaya has ties to Xiaomi Corp. (HKEX: 1810) – its co-chief financial officer, Steve Lin, served as the tech giant's director of corporate finance and company secretary; he also served with McKinsey & Company, Macquarie Capital Securities, and Deutsche Bank Group. Ximalaya has been providing ads services to Xiaomi.

As to Jianjun Yu, the co-founder, CEO, and chairman of Ximalaya, he is a serial entrepreneur, founder of and Shanghai Jietu Software Technology Co. Ltd.

According to the prospectus, in the first quarter, Ximalaya counted 13.3 million average paying members. Monthly subscription to Ximalaya costs at or below 25 yuan ($3.8), while annual was at up to 268 yuan ($41.1), depending on the package. It also offers bundle memberships from time to time in partnership with Tencent Video, iQiyi (Nasdaq: IQ), Youku, Meituan (OTC: MPNGY; HKEX: 3690) and (Nasdaq: JD; HKEX: 9618).

Ximalaya has also struck partnerships with some major automakers to provide in-car audio. These include Tesla China (Nasdaq: TSLA), Mercedes-Benz (OTC: DMLRY), BMW (OTC: BMWYY), Audi, Geely (OTC: GELYF; HKEX: 0175), and BYD (OTC: BYDDY; HKEX: 1211).

XIMA, Ximalaya, TCEHY, Tencent, IPO