Chinese Video App Kuaishou Raises $5.4 Billion in Hong Kong IPO

(Bloomberg) -- Kuaishou Technology, the operator of China’s most popular video service after ByteDance Ltd.’s Douyin, raised HK$42 billion ($5.4 billion) after pricing its Hong Kong initial public offering at the top of a marketed range.

The short-video startup, backed by Tencent Holdings Ltd., sold 365 million shares at HK$115 apiece, according to terms for the deal obtained by Bloomberg on Friday. It was marketing the shares at HK$105 to HK$115 each.

Kuaishou’s IPO pricing values the company at $60.9 billion. That’s more than double the $28.6 billion valuation it achieved in a funding round last year, according to PitchBook. The deal ranks as the world’s biggest internet IPO since Uber Technologies Inc.’s $8.1 billion U.S. share sale in May 2019.

The Chinese startup’s IPO will also give another boost to Hong Kong’s already-hot capital markets. Chinese tech firms are eyeing sizable offerings to tap the robust demand, with U.S.-listed internet search giant Baidu Inc. aiming to raise at least $3.5 billion via a second listing in the city, Bloomberg News has reported.

Kuaishou’s IPO proved a huge hit with both retail and institutional investors, who put in billions of dollars worth of orders. The overwhelming demand for the first purely short-video-focused company out of China to go public is a positive sign for its bigger rival, ByteDance, which controls the domestic Douyin app and its international counterpart, TikTok.

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ByteDance has long been a rumored IPO candidate but was bogged down last year in fighting a U.S. ban on TikTok after the video service was labeled a national security threat. The social media giant was in discussions to raise $2 billion ahead of a listing of some of its businesses in Hong Kong, Bloomberg News reported in November.

Kuaishou, which means “fast hand,” is one of China’s biggest internet success stories of the past decade, part of a generation of startups that thrived with backing from Tencent. Along with ByteDance, the outfit co-created by former Google engineer Su Hua in 2013 pioneered the live streaming and bite-sized video format that’s since been adopted around the world by the likes of Facebook Inc.

The company attracted 10 cornerstone investors to its offering, who agreed to subscribe for around $2.45 billion of stock, including Capital Group Cos., Temasek Holdings Pte, GIC Pte, BlackRock Inc. and the Abu Dhabi Investment Authority.

Kuaishou’s shares are due to start trading in Hong Kong on Feb. 5. Morgan Stanley, Bank of America Corp. and China Renaissance Holdings Ltd. are joint sponsors of the deal.

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