Shares of Chinese short video app company Kuaishou jumped 194% at the open on its Hong Kong debut on Friday.
Kuaishou priced its shares at HK$115 apiece, at the top of its range. The company sold 365 million shares and raised HK$41.28 billion ($5.4 billion) from its initial public offer last week.
Shares of the Beijing-based company began trading at HK$338 per share on Friday, nearly three times its IPO offer price.
The company’s IPO is 1,200 times oversubscribed by retail investors, boosting the company’s valuation to a combined HK$1.28 trillion (US$164.8 billion).
If Kuaishou triggers the greenshoe option, which will allow underwriters to issue more shares than originally planned based on demand, the firm can sell a further 54.78 million shares in the 30 days after listing that could bring the total amount raised up to $6.2 billion.
If so, it will become Hong Kong’s largest IPO since Budweiser Brewing Company’s $5.75 billion float in September 2019.
Ten cornerstone investors led by Capital Group and involving Temasek Holdings, GIC, BlackRock and Fidelity invested in the IPO.
The company, 17.7% owned by Tencent Holdings, said it plans to use the funds for acquisitions and investments, strengthening its ecosystem and developing its software, R&D and technical capabilities.
Kuaishou, founded in 2011 by former Google employees Su Hua and Cheng Yixiao, was originally a GIF-maker app. In 2013, it pivoted to short video sharing and added live streaming features in 2016.
The first day of trading boosted the value of chief executive Su’s stake in the group to more than $21 billion, according to the Financial Times. The stake held by Cheng, who is the firm’s chief of product, is also worth nearly $17 billion.
In a speech prior to the opening bell, Su said he had envisioned Kuaishou’s listing during the company’s early days.
“The loyal users of Kuaishou should be the ones hitting the gong, while Yixiao and I should stay at our desks writing code,” Su said.
“In 2011, Kuaishou started an era of short video content. Over the past 10 years, we have popularized this form of expression and broken the constraints of text-based communication and the boundaries of culture, allowing more people the opportunity to express themselves and be seen,” he said, adding that the platform’s users have built a diverse community that continues to evolve, continuously revealing new business models for the company.
Kuaishou had about 264 million daily active users as of November 2020, according to its prospectus. In China, it has a particularly strong base among users in lower-tier cities and rural communities. Its rival, ByteDance’s Douyin, has 600 million.
Livestreaming sales, online marketing services, e-commerce business and online games constitute the main source of revenue for the firm.
According to the company prospectus, “virtual gifting” is still the app’s greatest revenue generator, accounting for 62% of revenue earned in the first nine months of 2020.