Kuaishou Surge Affirms China’s Tech, IPO Clout As World Recovers From Pandemic

International investors in China technology stocks that had originally expected to end the Chinese lunar “Year of the Rat” with a big gain from Jack Ma’s Ant Group listing finally got a huge return today with the explosive start of trade by a different Internet Chinese company: Kuaishou Technology.

Kuaishou, the country’s No. 2 short-form video platform backed by Internet heavyweight Tencent, gained as much as 194% from its IPO price at the Hong Kong Stock Exchange in its debut. The IPO raised $5.4 billion, the world’s largest tech listing since Uber, and valued the company at more than $160 billion.   That’s about half of Disney. 

Though short-form video rival ByteDance’s TikTok is better known outside of China, Kuaishou entered the business earlier and remains a heavyweight. Its successful expansion into e-commerce further illustrates how China – the world’s No. 2 economy and No. 1 number user of mobile phone users – is making a mark in the global media and entertainment industry. China’s early recovery from the worst of COVID-19 pandemic is fueling the return of GDP growth to pre-pandemic levels, and making it attractive for large international stock offerings even amid continuing geopolitical strains with the United States.

Kuaishou sold 365.2 million shares at HK$115 each in its Hong Kong IPO, raising HK$42 billion, or $5.4 billion. Besides Tencent, its main shareholders include cofounders Su Hua, the CEO, and Chen Yixiao, the chief product officer – both already billionaires even before the IPO – along with funds associated with Morningside, DCM, Baidu, Sequoia and Baidu, among others. 

In the nine months ended Sept. 30, Kuaishou attracted 305 million daily average users and 769 million monthly average users of its apps and mini programs. Users on the popular platform spent an average of more than 86 minutes per day on the Kuaishou App and accessed the app more than 10 times a day, according to iResearch figures in the prospectus.   

Mobile internet users in China on average spent 4.35 hours online each day in 2019, compared to 2.90 hours in 2015, and are expected to spend 5.73 hours online each day by 2025, iResearch says. Approximately 29.7% of that time was spent on video-based social and entertainment platforms in 2019, which is expected to reach 36.3% by 2025.

Among Kuaishou’s billionaires, Su – a former executive at Google China and Baidu – holds a  more than 11% stake worth $19.2 billion in today’s trading; Chen – formerly with Hewlett-Packard – has a 9% stake worth $15.3 billion. Su, 38,  was worth $4 billion on the 2020 Forbes China Rich List; Chen, 37,  was worth $3 billion.   Today’s listing adds at least two other Kuaishou billionaires: Yin Xin — worth $3.3 billion — and Yang Yuanxi — worth $2.8 billion — also joined those ranks. 

Cornerstone investors buying shares in the IPO include funds associated with the Capital Group, Temasek, Invesco, Fidelity International, Blackrock, Boyu Capital, Morgan Stanley and the Abu Dhabi Investment Authority. 

Alibaba Group’s Ant IPO was postponed in November amid regulatory concerns. 

— with Elaine Mao