Kuaishou Technology was seeking to raise $5.4 billion in the world's biggest internet initial public offering. Photo: AFP

HONG KONG – Chinese technology company shares received a boost on Monday by the announced initial public offering (IPO) of Kuaishou Technology, a short video company backed by Tencent Holdings.

Kuaishou will seek to go public in Hong Kong and raise as much as HK$42 billion (US$5.42 billion) by selling 365 million shares at HK$105 (US$13.55) to HK$115 each. One lot is 100 shares, which is worth in total HK$11,615.89 including the subscription fee.

The company will start taking investor orders between Monday and Friday this week and debut on the Hong Kong Stock Exchange on February 5, according to the plan.

Kuaishou’s IPO has so far attracted 10 cornerstone investors, including The Capital Group, Temasek Holdings, GIC, BlackRock Inc and Abu Dhabi Investment Authority. They agreed to subscribe for US$2.45 billion of the IPO’s shares.

On Monday, mainland investors continued to buy Chinese stocks in Hong Kong, or so-called H-shares, through the Stock Connect program which drive up the Hang Seng Index last year.

A net flow of HK$19.26 billion flooded into Hong Kong’s stock markets from mainland China on Monday.

Tencent jumped 10.93% to HK$766.5 while Meituan rose 5.16% to HK$399.8. Shares of Hong Kong Exchanges and Clearing Ltd jumped 8.33% to HK$553.

Smartphone maker Xiaomi increased 2.52% to HK$30.55 while Alibaba Group Holding surged 2.95% to HK$258. The Hang Seng Index, Hong Kong’s benchmark, rose 2.41% to close at HK$30,159, the highest since June 2018.

The sentiment in Hong Kong’s stock markets has been fueled by the IPO plan of Kuaishou, which literally means “fast hand” in Chinese.

Kuaishou is a rival to Bytedance’s TikTok video-sharing platform. Image: Twitter

The company, which is seen as a key competitor of TikTok parent ByteDance, was founded in 2011. It first launched an app that makes animated GIFs, later diversified into a video-based social media platform in 2013, and launched live streaming features in 2016. The company plans to explore other revenue sources such as online games and education.

In the first nine months of last year, Kuaishou’s app had 262 million active users per day on average, compared with 165 million in the same period of 2019.

Revenue from live streaming is Kuaishou’s main income source, accounting for 62.2% of the company’s revenue in the nine months ended September 2020.

Investors could make a 30 to 40% profit on Kuaishou’s IPO shares, given that the company has strong revenue growth and a positive business outlook, said Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai.

Paul Pong, managing director at Pegasus Fund Managers, said both Kuaishou and TikTok were embraced by young people and would maintain robust growth in the long run.

Pong expected that Kuaishou’s share performance would also be supported by the recent rising momentum on Hong Kong’s stock markets. He said it was also possible that Kuaishou would be included in the Hang Seng Index in the future.

Read: ‘Biden effect’ buoys HK stocks to 20-month high