According to people familiar with the matter, the pre-IPO valuation of Kuaishou, one of China’s leading short-video start-ups, has reached $25 billion. If the company manages to live up to the investors’ expectations after its IPO that is planned for the next year, its market cap could surpass that of the three major Chinese streaming platforms HUYA, Inke, and Douyu, all of which have already been publicly listed.
The pre-IPO round of financing that put a $25 billion valuation on Kuaishou will be led by Tencent, with about 6 or 7 other investors also interested in acquiring a stake in the company. It is rumored that the negotiations are now nearing their conclusion.
“We understand that the cash flow of Kuaishou is still abundant, the business is doing well, and the profitability is good. Whether from the perspective of shareholders or from the perspective of its own development cycle, I think listing is an inevitable thing,” said a person familiar with the situation to the Chinese media outlet 21st Century Business Herald.
Kuaishou was founded in 2011 and is one of the fastest growing short-video applications in China. According to the latest data, Kuaishou’s Daily Active Users (DAU) exceeded 200 million in May 2019, while the DAU of Douyin, the Chinese market version of TikTok and Kuaishou’s main competitor, soared to 320 million in July.
Tencent has been the lead investor in Kuaishou since 2017, when it invested $350 million in the company that then had only 50 million DAU. In January 2018, Kuaishou raised an additional $1 billion in Series E financing, with investors including Tencent and Sequoia Capital. In April 2018, Tencent poured another $400 million into the company.