Tencent Registers for Hong Kong IPO worth $800 Million
China Literature Ltd., a fraction of Tencent Holdings Ltd. and the largest e-book and online publishing company of the country, has registered for a Hong Kong public offering. This offering is anticipated to lift in so far as $800 Million.
The contract is also a booster for the Hong Kong bourse that has been unsuccessful to attract a noteworthy number of tech deals in spite of being the top destination in the world for new listings last year. The firm, which is seeking to lift funds for possible acquirements and grow its mobile reading venture, has employed Credit Suisse, Bank of America Merrill Lynch, and Morgan Stanley as investors of the offering, it claimed in a filing this week.
Even though the arrangement of the contract was not revealed, Tencent has claimed that it anticipates holding minimum 50% of China Literature after the spinoff and that the offering will comprise 15% of the company’s enlarged stake fund. The media has earlier reported that the contract might lift funds between the range of $600 Million to $800 Million.
China Literature has a venture analogous to Kindle Store of Amazon.com Inc., handling a platform of 8.4 Million literary workings from 5.3 Million writers. The company witnessed revenues elevation by 59% in 2016 to $377 Million (2.6 Billion Yuan), while it published a total profit of $206.72 Million, in comparison to a loss of $2.4 Billion in 2016. It is its initial net profit since it commenced revealing fiscal information in 2014.
Tencent commenced its online reading venture in 2004 and it expanded considerably in 2014 post the acquirement of Cloudary Corp. for $729.6 Million. Cloudary had registered on the New York Stock Exchange to go public in 2011 and 2012, prior to withdrawing the listing request in 2013 owing to market circumstances, the filing quoted. Tencent leads China Literature with a 62% share. Private equity company Carlyle Group LP possesses 12.2% while Trustbridge Partners, a private equity company established by Shujun Li, Shanda Interactive’s previous CFO, holds 6%.
Let us see if the offering by Tencent will be able to lift up $800 Million as anticipated or not.