initial public offerings (IPOs) trading on American exchanges

Friday, May 8, 2020

Kingsoft Cloud (KC) began trading on the Nasdaq on Fri 8 May 2020

Chinese cloud computing company Kingsoft Cloud Holdings Ltd raised $510 million in its U.S initial public offering, the first Chinese company to list in the United States since the coronavirus pandemic outbreak sent markets tumbling.
  • Kingsoft Cloud (KC) closes its first U.S. trading day up 38% to $23.49.
  • The company priced 30M ADS at $17 each, raising $510M in the offering at a roughly $3.7B valuation. The company originally planned to sell 25M shares but increased the size due to demand.
  • Spun off from software giant Kingsoft.  KC competes with cloud services from tech giants Alibaba (BABA) and Tencent (TCEHY). Alibaba controls nearly half of China's cloud market and Tencent has about a fifth.
  • Like other cloud services companies, Kingsoft Cloud could benefit from the new normal of remote working, gaming and learning online. While China's cloud market is only 4% of the global total, it is growing fast.
  • Kingsoft Cloud boasts some heavy hitters as clients, including smartphone maker Xiaomi and ByteDance, the Beijing-based startup behind popular apps TikTok and Douyin. ByteDance has seen huge user growth and a record revenue haul during the pandemic.
  • Kingsoft Cloud's chairman, Lei Jun, is no stranger to buzzy public offerings. He is the founder of smartphone maker Xiaomi, which raised $4.7 billion in a highly anticipated public offering in Hong Kong in 2018.
The cloud service provider had planned to sell 25 million shares but increased the size of the deal to 30 million on Friday on the back of better than expected demand from shareholders, parent company Kingsoft Corp said in a statement on Friday.

The deal represented 13.9% of the company's issued capital and was priced at $17 per share, in the middle of its expected range, valuing the Xiaomi-backed group at $3.7 billion.

Loss-making Kingsoft offers cloud infrastructure as well as enterprise cloud and artificial intelligence services.

Cloud computing has so far been one of the sectors boosted by the novel coronavirus outbreak as it drives more businesses to operate digitally and rely on cloud computing.

The value of the company will rise if a so called 'greenshoe' option is exercised and an extra 4.5 million shares are sold within the next 30 days by the banks which underwrote the deal.

Existing shareholders Kingsoft Group, Xiaomi and Carmignac Gestion anchored the IPO, with Kingsoft buying up to $25 million of the stock offered, and Xiaomi and Carmignac buying up to $50 million each, Kingsoft said.

Kingsoft is the first major U.S. IPO by a company that is neither a biotechnology firm nor special purpose acquisition company (SPAC) since Canadian waste management company GFL Environmental in early March. Biotech and SPAC IPOs are typically immune to broader market swings.

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