Chinese enterprise-level cloud computing products and solutions developer QingCloud is targeting to raise nearly 1.19 billion yuan ($168 million) in an initial public offering (IPO) on the Nasdaq-style STAR Market, according to a prospectus filed on the Shanghai Stock Exchange (SSE) on Tuesday.
Beijing-based QingCloud, which plans to offer no more than 12 million shares, is the latest Chinese cloud service company to move towards an IPO on the startup board, following its homegrown peer UCloud Technology. UCloud floated an IPO of about 1.94 billion yuan ($275 million) in January 2020 as the first listed firm with a dual-class share structure on the mainland stock market.
The IPO comes as China’s cloud infrastructure services market grew 66.9 per cent to reach $3.3 billion in the fourth quarter of 2019, making it the second-largest market after the United States, according to research firm Canalys.
Accounting for 10.8 per cent of the global market size, China’s cloud infrastructure services field was led by Alibaba’s cloud unit with over 46 per cent market share, followed by Tencent at 18 per cent and Baidu AI Cloud at 8.8 per cent.
QingCloud, founded in April 2012, is an enterprise-class cloud computing services, products and solutions provider that helps fuel the digital transformation of corporate clients.
Built on full-stack cloud architecture across infrastructure as a service (IaaS) and platform as a service (PaaS) offerings, the Beijing-based company delivers cloud platforms and hyper-converged systems, software-defined storage products, as well as security operation and maintenance services and more.
The firm serves large-scale corporate clients like commercial bank China Everbright Bank, state-owned Bank of China (BOC), Chinese electricity generation firm State Power Investment, and government mouthpiece radio broadcaster China Radio International. It also offers services to private-run companies like Beijing-based after-school education service TAL Education, online education platform VIPKid, and intelligent security solutions provider SENSORO.
The prospectus shows that QingCloud booked increased revenues of 377 million yuan ($53 million), 282 million yuan ($40 million), and 239 million yuan ($34 million) between 2017 and 2019.
The firm is yet to become profitable although its net losses continued to decrease in the past three years, standing at 191 million yuan ($27 million), 149 million yuan ($21 million), and 96 million yuan ($14 million) in 2017, 2018 and 2019, respectively.
The IPO proceeds will be used for the upgrade of cloud computing products, research and development of iPaaS technology, and construction of cloud-based integrated online infrastructure, as well as replenishment of working capital.
“Before the proposed IPO, the company’s daily operations have been dependent on external financing since inception,” said QingCloud in the prospectus. “Our financial position might encounter pressure if the funds needed to support operations and development exceed the accessible financing from outside.”
BlueRun Ventures, which first invested in QingCloud’s $2-million Series A round in 2013, is the largest institutional investor of QingCloud with a combined 14.15 per cent stake through two subsidiaries, according to the prospectus. Beijing-based Unity Ventures, led by Baidu founding member Wang Xiao, is another earliest investor in QingCloud with a 1.61 per cent stake.
Huang Yunsong, co-founder and CEO of QingCloud, currently owns an 18.92 per cent stake as the company’s largest shareholder.
QingCloud closed 1.08 billion yuan ($153 million) in a Series D round from a consortium including Chinese private equity firm Riverhead Capital, CICC Jiatai Fund, China Oceanwide Holdings Group, as well as China Merchants Securities and its affiliate in June 2017. Existing investors such as venture capital companies BlueRun Ventures and Lightspeed China Partners participated in the Series D round.
The company announced in March 2016 the completion of a Series C round at $100 million. The round led by two RMB-denominated funds with participation from BlueRun Ventures. The firm also received $20 million in a Series B round in December 2013.