Chinese video app Kuaishou hits $160bln valuation after IPO

February 06, 2021

Hong Kong: Shares in Kuaishou nearly tripled on their first day of trading in Hong Kong, propelling the valuation of the Chinese viral video app to $160bn, close to that of ByteDance, the owner of its chief rival TikTok.

The company’s stock gained as much as 194 per cent on Friday after it raised about $5.4bn in its initial public offering, the biggest in the tech industry since Uber raised more than $8bn in 2019. They closed about 160 per cent higher.

ByteDance last raised money at a $180bn valuation, and is also considering a Hong Kong listing this year for some of its China businesses, according to people close to the company.

“For a sizeable IPO like this one I can’t recall any . . . reaching this sort of extraordinary performance” on day one, said Ronald Wan, chief executive and founder of Hong Kong investment firm Partners Capital.

The first-day pop boosted the value of Kuaishou chief executive Su Hua’s 11.8 per cent stake in the group to almost $19bn. The 9.2 per cent stake held by Cheng Yixiao, the company’s founder and chief of product, is also worth nearly $15bn. The two men effectively control the company through a special class of stock with 10 times the voting power of ordinary shares.

Early stage backer 5Y Capital holds a 13.7 per cent stake worth $21.8bn. Its initial $1.3m investment alone is now worth $13.8bn — a 1,045,925 per cent gain that makes it one of the best venture capital bets of all time. DCM Ventures, Kuaishou’s second outside investor, put in $50m over several financing rounds for a stake now worth $12bn.

“We thought short video would be big in China, but Kuaishou has exceeded our expectations and hence we’re in a happy place now,” said partner David Chao.

Cheng founded Kuaishou about a decade ago as a tool for users to create GIFs — short animated images — on smartphones. The company pivoted toward short videos as smartphone cameras and data networks became faster and more powerful.

More than 262m Chinese users check the Kuaishou app an average of 10 times a day, spending an average of 86 minutes watching videos and chatting with the creators who make them.