Tencent-backed Douyu raises $775 million in US IPO

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China’s biggest live-streaming platform Douyu announced on Wednesday it raised $775 million after pricing its US initial public offering (IPO) at the low end of the indicated range.

Why it’s important: The deal is so far the largest Chinese IPO in the US in 2019, eclipsing that of Luckin Coffee which raised $645 million, according to Reuters, citing market data.

  • The Tencent-backed video game live-streaming platform in April filed its IPO application to Securities and Exchange Commission (SEC), following its largest Chinese competitor Huya, which listed in May last year.
  • The company delayed its IPO roadshow in May amid the intensifying US-China trade war.

When asked about the impact of short video platforms, CEO Chen Shaojie told Tencent News that they are a complement to what live-streaming platforms offer:

“Short videos are more similar to compilations of highlights whereas livestreams are like entire matches for users to immerse in. Users watch both full matches and compilations because they are different experiences, so they don’t compete directly.”

—Chen Shaojie, Douyu CEO, to Tencent News

Despite growth in Douyu’s advertising business, Chen said that the platform’s revenue will still come mainly from user subscriptions and tips.

Details: The Wuhan-based company sold American depositary shares (ADS) at $11.5 each, compared with a previously stated target of $11.5 to $14.0, said the company on Wednesday.

  • The company’s market cap reached $3.73 billion after the pricing. Shares in the company are set to begin trading on Nasdaq on Wednesday under the symbol “DOYU.”
  • Its revenue doubled year on year in 2017 and nearly doubled again in 2018 when it reached RMB 3.65 billion (around $530 million), according to its IPO filing. Net losses declined around 22% year-year in 2017 and increased 43% year on year in 2018.

Updated to include comments from Douyu’s CEO. With contributions from Tony Xu.