Kingsoft Cloud, the cloud computing spin-off of Hong Kong-listed Chinese software firm Kingsoft, has filed for an initial public offering (IPO) on the Nasdaq last Friday to raise up to $100 million.
Beijing-based Kingsoft Cloud, which has yet to disclose the pricing terms, first revealed the spin-off and listing plan in December 2019 as the company filed confidentially with the U.S. Securities and Exchange Commission (SEC).
Kingsoft Cloud, founded in 2012, has built a cloud platform consisting of cloud infrastructure, cloud products as well as industry-specific solutions.
Lei Jun, a Chinese billionaire who co-founded smartphone brand Xiaomi and venture capital firm Shunwei Capital, holds a 15.8 per cent stake in Kingsoft Cloud, while the parent firm Kingsoft is the largest shareholder with a 53.8 per cent stake, according to a prospectus. Wang Yulin, senior vice president and CEO of Kingsoft Cloud, owns 2.1 per cent shares.
The listing plan comes as the market size of China’s cloud services grew at a CAGR of 37.7 per cent from 2015 to 2019 and is expected to retain a growth rate of 28.3 per cent between 2019 and 2024, according to Frost & Sullivan.
Kingsoft Cloud is the third-largest internet cloud service provider in China, after the cloud computing units of Chinese e-commerce giant Alibaba Group, and gaming & social media firm Tencent. The company has a market share of 5.4 per cent in terms of revenue from Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) public cloud services in 2019.
Previously, Kingsoft Cloud sold 55.09 million shares to raise $50 million from investors including China Internet Investment Fund (CIIF), a 100-billion-yuan ($14.13 billion) fund co-launched by China’s Ministry of Finance, according to a regulatory filing in December 2019.
The company reached a valuation of over $2.37 billion after it closed a Series D round at $720 million in January 2018. Chinese investment firm FutureX Capital and Kingsoft each injected $100 million for 144.97 million shares in the round.
The firm booked revenue of nearly 3.96 billion yuan ($568 million) in 2019, up 78.4 per cent from 2.22 billion yuan in 2018. Its net loss stood at 714 million yuan, 1.01 billion yuan, and 1.11 billion yuan ($159.6 million) in 2017, 2018 and 2019, respectively, according to the prospectus.
Kingsoft Cloud will list on the Nasdaq under the symbol “KC.” J.P. Morgan, UBS Investment Bank, Credit Suisse, and China International Capital Corporation (CICC) are the joint book-runners on the deal.