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Five most highly-anticipated Chinese tech IPOs for 2018
After a slow start, Chinese tech firm sped up its IPO rush in the latter half of 2017, marked by hefty IPOs like the ones from China Literature, ZhongAn, Qudian, and Sogou.
The past year also witnessed strong performances from some of China’s top listed tech giants. Tencent joined the half-a-trillion-dollar club last November, while Alibaba is expected to smash the same milestone in no time. The relentless growth continues, setting the stage for Chinese unicorns who are ready to ring the opening bell in the new year ahead with fiercer competition between Hong Kong and New York expected.
Generally, rumors circle around the possibility of a company’s IPO launch before it actually happens. Here’s a list of some of the most widely speculated IPO launches we may see in 2018.
Despite several delays, Ant Financial remains one of the most hotly anticipated listing candidates from China. The reason is simple. As the most valuable unlisted asset of Alibaba Group, the sheer size of this offering would make it incredibly interesting. Ant Financial’s most recent $4.5 billion monster round was received at an over $60 billion valuation in April 2016.
Ant Financial, the operator of China’s most popular mobile payment tool Alipay and other financial services, was founded in December 2014 when it was spun out of Alibaba before the latter’s record IPO in September 2014.
The company has been on the rumored IPO list for years and is said to be considering both Hong Kong and New York, two of the hottest listing destinations for Chinese tech firms.
Despite the struggles in late 2016 and early 2017, Chinese smartphone manufacturer Xiaomi is made an epic comeback last year through the combined forces of new flagship model launch, diversified distribution channels and dividends from early investments in overseas markets, especially the Indian one.
The firm broke its annual revenue target by as much as 18 percent, topping the annual revenue goal of about $15 billion. The net profit was estimated to be at least $1 billion in 2017, and profit for 2018 is expected to reach about $2 billion.
It seems good timing for an IPO as the firm’s performance is back on track for robust growth. Bankers estimate that Xiaomi’s IPO could value the company at up to $100 billion.
Tencent Music, the music streaming and downloading service, is expected to be the latest addition to Tencent’s recent efforts to get its affiliates listed.
In addition to social networking and gaming, Chinese tech behemoth Tencent has been able to dominate yet another sector in its home market—music streaming. Through a merger between its flagship music streamer QQ Music and competitor China Music Corporation (CMC) in July 2017, the firm’s new music unit Tencent Music and Entertainment Group (TME) managed to control a whopping 75% of the market by combining the shares of Kuwo and KuGou—formerly owned by CMC—and QQ Music, according to a report by the Data Center of China internet (DCCI). To consolidate its foothold in domestic or even the global market, the music group has just reached an equity swap agreement Spotify ahead of the rumored IPO.
Before the merger, Tencent affiliate CMC reportedly planned for an independent listing in 2016. Sources with knowledge of the matter disclosed that the IPO would range between $300 to 600 million back then. The IPO size for the new firm is expected to be much bigger than that, somewhere around $1 billion IPO at $10 billion valuation as Bloomberg has predicted.
Tencent is also planning an IPO for its mobile healthcare arm WeDoctor Group, a platform that includes various medical-related services from online diagnosis and medical tips to rating hospitals and doctors.
Baidu has envisioned an IPO for its YouTube-style video streaming service iQiyi for a long time. In May 2014 CEO Yu Gong told Bloomberg that the company planned to IPO within the next three years. The latest update comes from an anonymous source who hinted that the IPO would come as soon as in 2018, valuing the streaming video service at more than $8 billion.
The heated competition is turning video streaming into a capital heavy sector. In a battle against Alibaba-backed Youku and Tencent’s Tencent Video, iQiyi needs more quality content, both self-generated content and exclusive partnerships, to sustain its lead among online video platforms.
The site has raised $1.53 billion from the sale of convertible notes to investors include Hillhouse Capital, Boyu Capital, Run Liang Tai Fund, IDG Capital, Everbright-IDG Industrial Fund, and Sequoia Capital.
Lufax, one of China’s largest peer-to-peer lenders and online wealth managers, is reportedly geared up for a Hong Kong initial public offering. The firm, valued at $18.5 billion in its last fundraising round in January 2016, could be raising $3 billion-$5 billion in the IPO as early as the first half of 2018, the report pointed out.
While the IPO rush of Chinese fintech firms is gaining attention from the capital market, it’s normal that Lufax, a top player in the sector, would follow the suit. Lufax’s initial offering has been highly watched by bankers since last year. But the lack of clear regulations on online wealth management has held back its IPO, FT pointed out. Regulatory issues also attribute to the delay of Ant Financial’s IPO.
Image credits: Ant Financial, Xiaomi, Tencent, iQiyi, Lufax