ByteDance’s Chief Rival Files for $5 Billion Hong Kong IPO
A worker counts Chinese 100 yuan banknotes in Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)

ByteDance’s Chief Rival Files for $5 Billion Hong Kong IPO

Kuaishou Technology has filed an application for a Hong Kong initial public offering, heading toward a listing that could raise as much as $5 billion and beat larger rival ByteDance Ltd. to market.

Kuaishou, or “fast hand,” reported revenue climbed 48% to 25.3 billion yuan ($3.8 billion) in 2020’s first half, underlining the scorching pace of growth of a Chinese short video market. The Tencent Holdings Ltd.-backed startup is angling for a valuation of $50 billion in an offering as soon as the end of this year, almost twice its current price tag, people familiar with the matter said, asking not to be identified because the deal hasn’t been finalized.

Kuaishou’s impending debut raises hopes the city will continue to attract listings from prominent internet companies despite the derailment of a highly anticipated debut by Jack Ma’s Ant Group Co. ByteDance itself is said to be in discussions to raise $2 billion before listing some of its businesses in Hong Kong, potentially as early as next year.

The two represent a generation of private Chinese startups that’ve risen to the fore thanks to a surge in short video, challenging the dominance of Tencent and Alibaba Group Holding Ltd. Kuaishou established its popularity among users in smaller cities and rural areas, with people streaming slices of everyday life from harvesting corn to slurping noodles. It’s since expanded to audiences in bigger cities, hosting content ranging from people playing video games to teenagers lip-syncing songs, much like ByteDance’s TikTok and Douyin.

Access to Kuaishou’s main app is free, with revenue generated from a cut of the tips users give their favorite live-streaming performers. At $50 billion, the company -- last valued by Pitchbook at $28.6 billion after a February funding round -- would surpass SpaceX and Airbnb to become the world’s third most valuable startup, according to CB Insights.

By the Numbers
KuaishouByteDance
Daily active users302 million600 million (Douyin)
2019 revenue$6 billion$17 billion
2019 net profit-$3 billion$3 billion

Source: Companies, Bloomberg News

Note: Kuaishou’s net loss includes almost 20 billion yuan of charges related to fair value changes in convertible preferred shares.

Morgan Stanley, Bank of America Corp. and China Renaissance Holdings Ltd. are joint sponsors of Kuaishou’s proposed IPO, according to pre-listing documents posted on the Hong Kong stock exchange’s website Thursday. Tencent has a 21.6% stake in Kuaishou, and other backers include venture capital firms DCM, DST Global and Sequoia Capital China, according to the filing. Chief Executive Officer Su Hua has 12.6%, while founder Cheng Yixiao has 10%.

The company has been increasingly expanding into advertising and e-commerce. Its apps had 776 million average monthly active users in the first half of the year, according to Thursday’s filing. Active users spent an average of more than 85 minutes daily on its main app.

©2020 Bloomberg L.P.

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