ByteDance's chief rival files for US$5b Hong Kong IPO

Hong Kong

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

Kuaishou, or "fast hand", reported revenue climbed 48 per cent to 25.3 billion yuan (S$5.2 billion) in 2020's first half, underlining the scorching pace of growth of a Chinese short video market.

The Tencent Holdings-backed startup is angling for a valuation of US$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 finalised.

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.

ByteDance itself is said to be in discussions to raise US$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. 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 favourite live-streaming performers. At US$50 billion, the company - last valued by Pitchbook at US$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.

Morgan Stanley, Bank of America and China Renaissance Holdings are joint sponsors of Kuaishou's proposed IPO, according to pre-listing documents posted on the Hong Kong stock exchange's website on Thursday.

Tencent has a 21.6 per cent 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 per cent, while founder Cheng Yixiao has 10 per cent.

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. BLOOMBERG