Tencent to bank roll China video app IPO valued at $25bn
Kuaishou, which specialises in short and mini-video content, is vital for Tencent’s strategy to compete with rival ByteDance
Hong Kong — Chinese start-up Kuaishou is considering going public in the US to bankroll its expansion in short videos and fend off competition from TikTok owner ByteDance, according to people familiar with the matter.
The company, backed by Tencent Holdings of which Naspers owns just more than 31%, plans to list next year, the people said, requesting not to be named because the matter is private. One person said Kuaishou also weighed the option of going public this year. The video start-up is raising more than $1bn at a $25bn valuation in a pre-initial public offering (IPO) round, mostly from Tencent, one of the people said.
Kuaishou is an important part of Chinese social media giant Tencent’s strategy to compete against ByteDance, which is now the world’s most valuable start-up. Tencent has devoted a lot of resources towards building a library of short- and mini-video offerings — key to retaining user attention and boosting advertising revenue — but has yet to catch ByteDance.
“Tencent’s biggest enemy is ByteDance right now,” said David Dai, a Hong Kong-based analyst at Bernstein. “Tencent hasn’t been very successful in short videos in the past, so resorting to investing in other companies instead is its best option.”
“Kuaishou is the only one that can still counter ByteDance now,” said Dai.
US-listed shares of some of Kuaishou’s competitors fell. Momo dropped 3.2% at 11.24am in New York while DouYu International Holdings fell less than 1%.
Tencent president Martin Lau said during an August earnings call that short and mini-videos would be a key vertical for expansion.
Kuaishou or “fast hand” first established its popularity among users in China’s smaller cities and rural areas, with people streaming slices of everyday life from harvesting corn to eating noodles. It’s also been luring users in bigger cities and expanding its content to include everything from people playing video games to teenagers lip-syncing songs.
Kuaishou was seeking funds in January 2018 at a valuation of $17bn. The company was valued at $3bn in January 2015 by CB Insights.
The eight-year-old company also counts Sequoia and Morningside Group Holdings as backers. It had 110-million daily active users as of December 2017, according to its website. Annie He, a spokesperson for Kuaishou, didn’t respond to requests for comment. Tencent declined to comment in an e-mailed statement.