iQIYI and Bilibili Seek to Join IPO Rush With New York Listing
Chinese companies are flooding the IPO market in America and there seems to be no letting up. Last year as many as 21 Chinese companies launched an IPO in America and this year the rush continues.
Two more Chinese companies are seeking to enter the US market with their initial public offerings (IPO). Baidu Inc.'s iQIYI and the popular Chinese video site Bilibili have both filed their intent to launch an IPO.
iQIYI is a video-streaming site similar to NetFlix and the company is hoping to raise $2.4 billion via its IPO. With this money, it hopes to expand its content and be able to compete against its rivals in the Chinese market, which includes Youku Tudou Inc., a streaming service operated by Alibaba Group Holding Ltd.
The plan is for the service to offer 125 million American depositary shares in its IPO. Each share will most likely be priced between $17 to $19 each. There will even be an option for underwriters to sell an additional 18.75 million shares. If this is done, the total value of the IPO will reach $2.7 billion.
The funds raised will mostly go to creating and enhancing the content on the video-streaming site which showcases original dramas and variety shows. From these funds, 10% will be reserved for improving the company's technology so that subscribers will have a better viewing experience. The balance amount will be used general corporate purposes.
After the IPO, Baidu will still control around 69.6 percent of iQIYI. The service is doing well and is quite profitable reporting at the end of February a subscriber based of around 60.1 million. The interesting thing to investors will be the fact that 98% of these subscribers are paying members. In 2017, the company earned around $2.7 billion, a 55% gain on its revenue in 2016.
Bilibili is another Chinese video site seeking investment. It has more modest ambitions, seeking to raise around $525 million. Each share will be sold at $10.50 to $12.50 each, with an option to sell an additional 6.3 million shares. Bilibili is aimed at a younger audience when compared to iQIYI, with a majority of the users born after 1990. It reports around 71.8 million active users every month and earned around $379 million in 2017.
Chinese Companies Go After Foreign Investment
While investors in 2017’s Chinese IPO offerings have reported a loss of 11% on a weighted average basis, Chinese companies are still seeking overseas investment and people are still buying. Tencent Holdings Ltd.'s music unit and Xiaomi Corp. are just two of the companies that have sent feelers for first-time share sales in Hong Kong and other countries. Most notably, Qu Toutiao, a Chinese news and video aggregation mobile app, is thinking about offering an IPO in the US valued at $3 billion.