Video streaming company Kuaishou valued at $61bn as it seeks Hong Kong float

In China’s popular online-streaming industry, virtual gift-presenting is big. You can send your preferred live performer anything from a rose for 5 yuan (80 cents) to a space rocket for 500 yuan.

The present is merely a symbol, but the money is real - and that’s what’s built Kuaishou Technology so successful.

The ByteDance rival is among the most biggest live-streaming platform for virtual gifts, with an increase of paying monthly users than any other on earth. The firm, which requires a trim of the tips fans share with performers, brought up $5.4 billion in Hong Kong in the biggest internet initial public offering since Uber Technologies in 2019, terms for the offer obtained by Bloomberg show.

That’s poised to create at least four billionaires with a combined fortune valued at $15 billion, based on the ownership disclosed found in Kuaishou’s prospectus [with the company valued in $61bn]. Co-founders Su Hua and Cheng Yixiao will each get worth a lot more than $5.5bn, according to the Bloomberg Billionaires Index.

Kuaishou, which means “fast hand,” is among China’s biggest internet success stories of days gone by decade, part of a generation of startups that thrived with backing from Tencent Holdings. Along with TikTok parent ByteDance, the outfit pioneered the live-streaming and bite-sized video recording format that’s since been followed all over the world by famous brands Facebook.

“The key resource of the internet is attention,” Mr Su wrote in Kuaishou’s official biography in 2019. “It might be focused on good sized quantities of people just like the sunlight, rather than a spotlight only on a certain group of people. That’s the easy logic behind Kuaishou.”

Mr Su, a good native of China’s central Hunan province, studied computer programming at the prestigious Tsinghua University before joining Google in Beijing in 2006. There, he earned about $23,000 annually, eight times the country’s average income back then. While he explained he was “extremely happy,” a stay static in Silicon Valley motivated him to get started on his own business, according to Kuaishou’s biography.

The 38-year-old quit Google during the global financial crisis to get started on his own video-advertising venture, which didn’t come to fruition. After a short stint with Baidu, he started to be familiar with Mr Cheng in 2011 plus they soon made a decision to pair up. In 2013, the duo changed the Kuaishou iphone app from a GIF-maker to the social video tutorial platform it really is today, initially gathering popularity with its videos of life in rural China.

With the rise of ByteDance’s Douyin, the Chinese twin iphone app of TikTok, Kuaishou broadened its appeal, luring influencers backed by talent agencies and pop stars like Taiwan’s Jay Chou. On the way, it increased monetisation by creating ad slots and in-app stores for brands and merchants.

While virtual gift idea purchases remain its bread and butter - they make up almost two-thirds of its earnings - the business is delving deeper into higher-margin businesses like e-commerce and online gaming. Its sales rose almost 50 % to 40.7 billion yuan in the first nine months of last year, based on the IPO prospectus.

Viewers spend typically almost 90 minutes on Kuaishou each day, and about a quarter of monthly users turn out content aswell. While that robust engagement differentiates Kuaishou from rival live-streaming platforms such as Joyy and Momo, the recent launch of a short-video feed by Tencent’s super-app WeChat has brought competition to some other level.

Kuaishou’s debut may be overshadowed by the potential IPO of its far larger rival, ByteDance, whose 600 million Douyin daily users are a lot more than double Kuaishou’s. Last valued at $180 billion, the world’s most significant start-up was reported to be exploring all of the some of its businesses in Hong Kong as the US this past year attempted to ban TikTok and force a sale of the application on national security concerns.

“Kuaishou has overhauled its product and be more similar to Douyin,” Citic Securities analyst Wang Guanran said in a January 26 note. “Both will face immediate competition with the other person later on.”

Kuaishou isn’t immune to geopolitical tensions either. While Mr Su told investors on a January 25 call that non-Chinese markets possess the potential to be a huge earnings driver, its platforms incorporating Kwai and Snack Video happen to be banned in India along with hundreds of Chinese apps as New Delhi and Beijing clash over border disputes. In the US, its TikTok-style Zynn service has got gained little traction since launching last May.

The company may also have to deal with a recently available crackdown on live streaming. China stated in November it could require performers and present givers to join up with their legitimate names, banned minors from tipping and asked the platforms to limit the worthiness of virtual presents.

Still, investors have already been rushing to acquire a piece of the first short-video platform which will start trading in February 5. The IPO coming in at the very best end of its marketed range, and the retail part was the virtually all subscribed ever, relating to International Financing Review, as the city’s market for new listings has been hectic recently. Some shares transformed hands at more than double the listing price of HK$115 ($14.83) in grey market trading on Monday, sources said.

Market enthusiasm this past year boosted the fortunes of top executives including those of Nongfu Spring’s Zhong Shanshan - now Asia’s richest person - and Blue Moon Group Holdings’s Pan Dong.

The Kuaishou founder is cautious about the power he’s amassed. In the company’s biography, Mr Su compared his platform’s capability to control internet attention and traffic with the main one Band from JRR Tolkien’s GOD, THE FATHER of the Rings trilogy.

“When you placed on the ring, you’ll come to feel extremely powerful,” he wrote. “However in fact, it’s the band and the power that are managing you.”