Programmatic advertising technology company PapayaMobile has announced their initial public offering (IPO) on China’s National Equities Exchange and Quotations Index, also known as the New Third Board.
With a valuation of 2.2 billion yuan ($337 million USD), PapayaMobile is projecting a revenue of 1 billion yuan ($153.3 million USD) with 100 million yuan ($15.34 million USD) in net profit for 2016.
PapayaMobile provides a programmatic advertising platform called Papaya Ads (formerly AppFlood). It runs real-time bidding on large traffic sources, including Facebook, Twitter and Google, and calculates the conversion rate to analyze which is the best ad format and platform to achieve high user traffic with the lowest advertising budget.
The process is done through company’s U.S-patented technology “Smart Convert”, an advertising campaign conversion system and method to predict the number of product downloads and spending. Notable clients of the Beijing-based company include Alibaba, Baidu, VIP.com and Qihoo 360.
PapayaMobile’s decision to list on NEEQ comes as a number of high-profile Chinese tech companies are entering privatization bids in a bid to move their listings from the U.S. back to the mainland. PapayaMobile, which was previously registered as a U.S company, says the decision was tough. Early last year the company made the decision to list on the New Third Board, where they can get a higher valuation and more funding. At the same time, the company had to restructure itself as a fully Chinese company.
“It was very different from [U.S company registration] and a painful process,” Si Shen, the CEO of PapayaMobile told TechNode on Monday.
“We were thinking of [listing on] NASDAQ. But when we went through roadshows, we found out that Chinese companies are not well-understood and undervalued [from overseas investors].”
Listing on the NEEQ is also strategic for the Beijing-based company’s international expansion into markets like the United States, India, and Southeast Asia.
“The NEEQ will enable us to raise more funds to implement an aggressive international M&A plan,” she says.
Papaya Mobile began as a mobile social gaming platform in 2008. Following customer requirements to bring in more users to mobile games, the company built an ad platform, later transforming into an adtech company. In recent months, demand from e-commerce companies expanding into global markets is growing, and now accounts for more than 30% of ad spending, according to the company.
In 2016, PapayaMobile said they plan to expand their market presence significantly outside of China through several multi-million dollar acquisitions in the U.S, India, and South-East Asia. The adtech company expects to close at least two multi-million dollar acquisition transactions in 2016, with more in the pipeline for 2017 and 2018, according to the company.
Ms. Shen also hinted that M&A discussions are “happening now”, and that PapayaMobile will acquire a U.S company in the coming months.
In China’s ad platform market, big players have launched ad platforms to monetize their user base. This month, Xiaomi launched an ad platform called Xiaomi Marketing to make advertising a main source of revenue while Cheetah Mobile launched their global ad platform in June 2015.
Image Credit: PapayaMobile