A Kuaishou app interface on a mobile phone, Yichang, Hubei province, China, January 20, 2021. Kuaishou is preparing for an IPO in Hong Kong.

Costfoto | Barcroft Media | Getty Images

GUANGZHOU, China – Chinese short video app Kuaishou rated its Hong Kong IPO to raise funds for rivals like Douyin, the Chinese version of TiKTok.

Kuaishou said it would issue 365,218,600 shares priced between Hong Kong dollars 105.00 and Hong Kong dollars 115.00.

At the higher end of the range, the company could raise around $ 42 billion in Hong Kong ($ 5.42 billion). The amount could be increased if the so-called over-allotment option is exercised. This option allows the underwriting banks to issue a percentage more shares when demand is high.

The shares will be traded in Hong Kong on February 5th.

Kuaishou’s IPO comes as Chinese regulators attempt to crack down on the country’s tech sector and have already taken steps to rule on live streaming platforms. In November, the state administration for radio, film and television set how much people can spend on virtual items and excluded young people from shopping.

In the case of virtual items, viewers buy a digital gift to give to their favorite streamers. For the nine months ended September 30, Kuaishou posted live streaming sales of 25.3 billion yuan (approximately $ 3.9 billion), representing over 60% of total sales. Much of the income from live streaming comes from virtual gifts.

Kuaishou’s other sales drivers include advertising and a fledgling e-commerce business where users can buy goods via the app.

Regulators in China have focused on the technology sector, trying to introduce rules in areas such as data protection, microlending and antitrust law.

WeChat owner Tencent is one of Kuaishou’s largest donors and owns around 21.5% of the company.

Kuaishou said it will use the proceeds to grow its products, research and development, selective acquisitions related to content, social entertainment and software, and general working capital.

Make a loss

Kuaishou said it had 262.4 million daily active users for its app in the first nine months of 2020, up from 165.2 in the same period in 2019.

The monthly paying users increased from 48.5 million in this period to 59.9 million.

However, the company posted a loss for the nine months ended September 30. It posted an adjusted net loss of 7.24 billion yuan as marketing costs skyrocketed.

Kuaishou’s initial public offering is another win for the Hong Kong Stock Exchange, which has managed to attract companies to list or make a secondary offering for the first time.

Chinese tech giants Alibaba, JD.com, and NetEase, all of which are listed in the United States, have had secondary listings in Hong Kong. CNBC reported this month that the Chinese video platform Bilibili is also preparing to raise over $ 2 billion in a secondary listing in Hong Kong.

Bank of America, China Renaissance and Morgan Stanley are working on the Kuaishou IPO.