China startup Little Red Book mulls moving IPO from US to Hong Kong

[HONG KONG] Chinese startup Xiaohongshu, or Little Red Book, is weighing a Hong Kong initial public offering (IPO) to raise at least US$500 million, after putting its US listing plans on hold, said sources.

The company, which calls itself a lifestyle content platform, is working with advisers and could file an application for a Hong Kong IPO as soon as this year, the sources said. A listing could even raise as much as US$1 billion depending on the market, they said.

Deliberations are still ongoing and details such as fundraising size and timing could change. A representative for Xiaohongshu said the company maintains regular communication with stakeholders, but that they do not have any specific IPO plans at the moment.

Backed by Tencent and Alibaba Group, Xiaohongshu is one of several companies that have been forced to revisit their US listing plans after China proposed new rules for firms going public overseas. Among them is a requirement for all companies holding data on more than one million users to submit to a cybersecurity review, one of the reasons Xiaohongshu paused its US float, Bloomberg News reported in July.

Xiaohongshu was seeking a valuation of about US$6 billion in a funding round last year, Bloomberg News reported. Other firms that are considering moving their US IPOs to the Asian financial hub include on-demand logistics and delivery firm Lalamove and artificial intelligence-chip startup Horizon Robotics, Bloomberg News has reported.

Chinese audio startup Ximalaya Inc is the first company since Didi to have formally moved its IPO from the US to Hong Kong, as it submitted listing documents last month.

Xiaohongshu, which stresses its name has no relation to the book of Mao Zedong's quotations, was founded in 2013 as an online community that recommends overseas e-commerce sites for users in China. It later entered e-commerce and evolved into a social media platform where users share their daily life moments through videos and pictures on topics ranging from skincare to food and travel. The platform had more than 1,000 employees as of last year, and its monthly active users surpassed 100 million as of July 2020, said its website.

BLOOMBERG