TikTok rival Kuaishou to raise up to $6.3bn in Hong Kong IPO

Chinese livestreaming and short video group Kuaishou is set to raise up to $6.3bn in a Hong Kong initial public offering in a test of investor appetite for China’s tech sector as it faces growing regulatory scrutiny.

The deal could value Kuaishou, which competes with ByteDance’s TikTok, at up to $61.7bn and would be the largest tech IPO since ride-hailing company Uber went to market in 2019.

The listing will raise between $4.9bn and $5.4bn, but that could rise to $6.3bn if bankers exercise an overallotment option to increase its size, according to a term sheet seen by the Financial Times. Shares are expected to price on Friday between HK$105 (US$13.55) and HK$115 (US$14.84) and begin trading on February 5.

The flotation comes as Chinese tech companies face an increasingly uncertain regulatory environment. The $37bn Hong Kong and Shanghai IPO of payments firm Ant Group was halted by Beijing at the last minute in November, while its ecommerce affiliate Alibaba is subject to an antitrust investigation.

Kuaishou, which is backed by Chinese internet group Tencent, earns most of its revenues from users sending virtual gifts to livestreaming hosts. The company takes roughly half of the gift price, which can range from a few cents to Rmb2,000 (US$309). 

Livestreaming rules announced in November ban teenagers from purchasing virtual gifts on platforms such as Kuaishou and limit total spending by any single user. The regulations also tighten controls on livestreaming ecommerce, where video hosts promote goods to shoppers, a growing business for Kuaishou.

Kuaishou competitors including TikTok have faced controversy over their operations and use of data amid tensions between the US and China. In December, a deadline for ByteDance to restructure TikTok’s US operations passed without a deal, and the company remains in negotiations about the short video app’s status in the country. 

Kuaishou’s app had about 262m daily viewers in the first nine months of last year, who on average spent 86 minutes per day watching videos. The company reported an operating loss of Rmb9bn on Rmb41bn in sales during the same period.

The company has spent heavily on bringing in new users as it faces an increasingly crowded online video market in China.

Cornerstone investors in Kuaishou’s IPO include asset managers Invesco and Fidelity as well as Singaporean state-backed investors Temasek and GIC, which will together buy shares worth up to $2.5bn with a six-month lock-up period.

“The quality and size of cornerstone investors are some of the highest we have seen in Chinese tech companies to come to market,” said one banker on the deal. “It shows that the market is still crying out for more liquidity in sizeable, high-growth tech companies.”

Kuaishou will use the funds for purposes including research and development, acquisitions and investment and expanding its ecosystem, according to the term sheet.

Tencent holds a roughly 22 per cent stake in Kuaishou after leading a $3bn financing round last year. As the number-two player in China’s online video market after Douyin — the Chinese version of TikTok — “Kuaishou is less susceptible to political noise”, according to one banker working on the IPO.

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TikTok rival Kuaishou to raise up to $6.3bn in Hong Kong IPO

Chinese livestreaming and short video group Kuaishou is set to raise up to $6.3bn in a Hong Kong initial public offering in a test of investor appetite for China’s tech sector as it faces growing regulatory scrutiny.

The deal could value Kuaishou, which competes with ByteDance’s TikTok, at up to $61.7bn and would be the largest tech IPO since ride-hailing company Uber went to market in 2019.

The listing will raise between $4.9bn and $5.4bn, but that could rise to $6.3bn if bankers exercise an overallotment option to increase its size, according to a term sheet seen by the Financial Times. Shares are expected to price on Friday between HK$105 (US$13.55) and HK$115 (US$14.84) and begin trading on February 5.

The flotation comes as Chinese tech companies face an increasingly uncertain regulatory environment. The $37bn Hong Kong and Shanghai IPO of payments firm Ant Group was halted by Beijing at the last minute in November, while its ecommerce affiliate Alibaba is subject to an antitrust investigation.

Kuaishou, which is backed by Chinese internet group Tencent, earns most of its revenues from users sending virtual gifts to livestreaming hosts. The company takes roughly half of the gift price, which can range from a few cents to Rmb2,000 (US$309). 

Livestreaming rules announced in November ban teenagers from purchasing virtual gifts on platforms such as Kuaishou and limit total spending by any single user. The regulations also tighten controls on livestreaming ecommerce, where video hosts promote goods to shoppers, a growing business for Kuaishou.

Kuaishou competitors including TikTok have faced controversy over their operations and use of data amid tensions between the US and China. In December, a deadline for ByteDance to restructure TikTok’s US operations passed without a deal, and the company remains in negotiations about the short video app’s status in the country. 

Kuaishou’s app had about 262m daily viewers in the first nine months of last year, who on average spent 86 minutes per day watching videos. The company reported an operating loss of Rmb9bn on Rmb41bn in sales during the same period.

The company has spent heavily on bringing in new users as it faces an increasingly crowded online video market in China.

Cornerstone investors in Kuaishou’s IPO include asset managers Invesco and Fidelity as well as Singaporean state-backed investors Temasek and GIC, which will together buy shares worth up to $2.5bn with a six-month lock-up period.

“The quality and size of cornerstone investors are some of the highest we have seen in Chinese tech companies to come to market,” said one banker on the deal. “It shows that the market is still crying out for more liquidity in sizeable, high-growth tech companies.”

Kuaishou will use the funds for purposes including research and development, acquisitions and investment and expanding its ecosystem, according to the term sheet.

Tencent holds a roughly 22 per cent stake in Kuaishou after leading a $3bn financing round last year. As the number-two player in China’s online video market after Douyin — the Chinese version of TikTok — “Kuaishou is less susceptible to political noise”, according to one banker working on the IPO.

Weekly newsletter

Your crucial guide to the billions being made and lost in the world of Asia Tech. A curated menu of exclusive news, crisp analysis, smart data and the latest tech buzz from the FT and Nikkei

Sign up here with one click

Mexico’s Covid-sceptical president tests positive

Mexico’s president Andrés Manuel López Obrador, who has refused to wear a face mask, has tested positive for coronavirus days after dining with some of the nation’s leading industrialists.

“I am sorry to inform you that I have caught Covid-19. The symptoms are light but I’m having medical treatment. As ever, I’m optimistic. We’ll all get through this,” he wrote on Twitter on Sunday.

Mr López Obrador, 67, has been criticised for playing down the severity of the pandemic in Latin America’s second-biggest economy. He has continued to hold meetings across the country despite record deaths and infections in recent days.

Hospitals in Mexico City are almost full and many infected people have struggled to obtain access to oxygen tanks.

The Mexican leader follows other Covid-19 sceptics, such as Jair Bolsonaro of Brazil and Donald Trump in the US, in contracting the virus. At a news conference last year, Mr López Obrador displayed an amulet that he said protected him from the pandemic.

He said he would still hold a scheduled call with Vladimir Putin on Monday morning to discuss procuring Russia’s Sputnik V vaccine and bilateral ties.

The Mexican president said he intended to continue following public affairs from the National Palace, but that Olga Sánchez Cordero, the interior minister, would replace him at his daily morning news conference.

Mr López Obrador, who suffered a heart attack in 2013 and suffers from hypertension, has repeatedly sent an upbeat message that Mexico was coping well with the pandemic and has refused to enforce lockdown measures, despite more than 1.7m confirmed cases and almost 150,000 deaths.

Mexico’s low testing rate and high excess deaths point to a far bleaker picture. Its rolling seven-day average of new deaths, at 0.962 per 100,000, is higher than that of the US, with 0.935, and Brazil, at 0.474.

On Friday night, Mr López Obrador spoke by telephone with US president Joe Biden and posted a photograph to Twitter of himself around a table with Marcelo Ebrard, foreign minister, and former cabinet chief Alfonso Romo. Hugo López-Gatell, the country’s coronavirus tsar, attended the president’s daily morning news conference on Friday.

On López Obrador also dined on Friday with eight senior business leaders, as well as Mr Romo, his economy minister Tatiana Clouthier and Mr Ebrard in Monterrey, the country’s business capital.

A person close to the business leaders said none had displayed Covid symptoms and they were taking all precautions.

The president, who travels on commercial airlines, spent the weekend touring the states of Nuevo León and San Luis Potosí, where he inaugurated National Guard installations and supervised welfare projects.

José Luis Alomía, Mexico’s director-general of epidemiology, told a daily Covid-19 news conference that “fortunately [Mr López Obrador] is stable, his signs and symptoms are light, he is at home” under the care of a multidisciplinary medical team led by Jorge Alcocer, the health minister.

Contact tracing of people with whom the president had been in contact was under way, he added. This month, Jesús Ramírez, the president’s press chief, tested positive for the virus.

Latest coronavirus news

Follow FT’s live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.

Mexico’s Covid-sceptical president tests positive

Mexico’s president Andrés Manuel López Obrador, who has refused to wear a face mask, has tested positive for coronavirus days after dining with some of the nation’s leading industrialists.

“I am sorry to inform you that I have caught Covid-19. The symptoms are light but I’m having medical treatment. As ever, I’m optimistic. We’ll all get through this,” he wrote on Twitter on Sunday.

Mr López Obrador, 67, has been criticised for playing down the severity of the pandemic in Latin America’s second-biggest economy. He has continued to hold meetings across the country despite record deaths and infections in recent days.

Hospitals in Mexico City are almost full and many infected people have struggled to obtain access to oxygen tanks.

The Mexican leader follows other Covid-19 sceptics, such as Jair Bolsonaro of Brazil and Donald Trump in the US, in contracting the virus. At a news conference last year, Mr López Obrador displayed an amulet that he said protected him from the pandemic.

He said he would still hold a scheduled call with Vladimir Putin on Monday morning to discuss procuring Russia’s Sputnik V vaccine and bilateral ties.

The Mexican president said he intended to continue following public affairs from the National Palace, but that Olga Sánchez Cordero, the interior minister, would replace him at his daily morning news conference.

Mr López Obrador, who suffered a heart attack in 2013 and suffers from hypertension, has repeatedly sent an upbeat message that Mexico was coping well with the pandemic and has refused to enforce lockdown measures, despite more than 1.7m confirmed cases and almost 150,000 deaths.

Mexico’s low testing rate and high excess deaths point to a far bleaker picture. Its rolling seven-day average of new deaths, at 0.962 per 100,000, is higher than that of the US, with 0.935, and Brazil, at 0.474.

On Friday night, Mr López Obrador spoke by telephone with US president Joe Biden and posted a photograph to Twitter of himself around a table with Marcelo Ebrard, foreign minister, and former cabinet chief Alfonso Romo. Hugo López-Gatell, the country’s coronavirus tsar, attended the president’s daily morning news conference on Friday.

On López Obrador also dined on Friday with eight senior business leaders, as well as Mr Romo, his economy minister Tatiana Clouthier and Mr Ebrard in Monterrey, the country’s business capital.

A person close to the business leaders said none had displayed Covid symptoms and they were taking all precautions.

The president, who travels on commercial airlines, spent the weekend touring the states of Nuevo León and San Luis Potosí, where he inaugurated National Guard installations and supervised welfare projects.

José Luis Alomía, Mexico’s director-general of epidemiology, told a daily Covid-19 news conference that “fortunately [Mr López Obrador] is stable, his signs and symptoms are light, he is at home” under the care of a multidisciplinary medical team led by Jorge Alcocer, the health minister.

Contact tracing of people with whom the president had been in contact was under way, he added. This month, Jesús Ramírez, the president’s press chief, tested positive for the virus.

Latest coronavirus news

Follow FT’s live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.