Kingsoft Cloud jumps in first big US IPO since Luckin fall

[NEW YORK] Kingsoft Cloud Holdings rose 40 per cent in the first major trading debut by a Chinese company since the accounting scandal at Luckin Coffee.

The affiliate of Hong Kong-listed Kingsoft Corp raised US$510 million (S$720.5 million) in its initial public offering (IPO), pricing its shares at the midpoint of a US$16 to US$18 targeted range.

The shares closed at US$23.84 in New York trading Friday, giving the company a market value of US$4.77 billion.

The Beijing-based cloud computing service company, which had marketed 25 million shares, increased the sale to 30 million American depositary shares.

The IPO is the biggest by a Chinese company in the US this year, according to data compiled by Bloomberg. It's a tricky time for Chinese companies listing in the US after the poster child of Chinese startups, Luckin, was accused of accounting fraud.

Luckin's shares had fallen 74 per cent from its IPO price last year when trading of its stock was suspended in April.

"Given the context regarding China ADR (American depositary receipts), it's actually good for quality companies," Henry He, Kingsoft Cloud's chief financial officer, said in an interview Friday evening in Hong Kong. "The capital has to be deployed and quality long-only investors will pay more attention to quality companies like us."

The financial performance of Kingsoft has been consolidated with its Hong Kong-listed parent since its inception and there are publicly available track records for investors to analyze, he added.

TENSE MOMENT

Kingsoft Cloud's IPO comes at a tense moment in the US-China relationship, after President Donald Trump and Chinese state media exchanged heated criticisms regarding the origin of the coronavirus responsible for a pandemic that has killed more than 269,000 and brought much of the world's economy to a standstill.

China Liberal Education Holdings, a Beijing-based educational company, fell 18 per cent in its US trading debut on Friday after raising US$8 million in its IPO.

A third company that went public Friday, Ayala Pharmaceuticals, rose 0.2 per cent after its US$55 million offering.

Kingsoft Cloud is the third-biggest cloud services provider in China by revenue with a market share of 5.4 per cent, according to its filings with the US Securities and Exchange Commission.

Last year, it lost US$160 million on revenue of US$568 million. Its chairman, Lei Jun, was a co-founder of smartphone-maker Xiaomi, which will own about a 14 per cent stake in the company after the offering, according to the filings.

The offering was led by JPMorgan Chase & Co, UBS Group AG, Credit Suisse Group AG and China International Capital Corp. The company's shares are trading on the Nasdaq Global Select market under the symbol KC.

BLOOMBERG