China’s answer to YouTube to raise $2.6bn in Hong Kong listing

Chinese video sharing site Bilibili will seek to raise $2.6bn in the latest so-called homecoming listing in Hong Kong, as shares in search group Baidu got a lukewarm reception from investors on their trading debut in the city.

Bilibili, a YouTube-like online entertainment hub that targets Chinese teenagers, told investors on Tuesday that it expected to price its shares at HK$808 (US$104) each. That puts the company on track to bring in about HK$20.2bn from the sale of 25m shares, people familiar with the matter said.

Shares in Baidu, widely viewed as China’s answer to Google, rose about 1 per cent on their first day of trading in Hong Kong after the company raised about $3.1bn.

The arrival in Hong Kong of Bilibili and Baidu, which both trade on New York’s Nasdaq, followed similar secondary listings by Chinese internet groups including Alibaba, JD.com and NetEase.

The companies have sought a stock market presence closer to home against a backdrop of tensions between Washington and Beijing. US lawmakers have threatened to delist Chinese companies from American exchanges if they do not comply with local accounting rules.

Some investors had hoped that the Biden administration would pursue a reset in US-China relations, which soured under the Trump White House. But during a high-level summit in Alaska last week, disagreements between top US and Chinese officials erupted.

One person familiar with the matter said both retail and institutional investor demand for Bilibili’s Hong Kong offering had been substantial, drawing “massive, long-only demand” from the latter. Bilibili declined to comment on the pricing of its Hong Kong share sale.

Bilibili’s US-listed shares have risen more than 400 per cent in the past year as the niche video platform has gone mainstream, signing up millions of Chinese users. Its Hong Kong shares are expected to begin trading next Monday.

Its revenue for 2020 grew 77 per cent to Rmb12bn ($1.8bn), as its monthly user count reached 202m, up 55 per cent from a year earlier.

Baidu has faced significant pressure in China as users migrate to rival apps with their own search functions. The company has also made mistimed bets on food delivery, gaming, short video and livestreaming that have failed to live up to expectations.

A push into electric cars with Chinese partner Geely has helped reignite investor enthusiasm. Baidu’s US-listed shares have risen 63 per cent since reports of the venture leaked in December, despite the group reporting zero annual revenue growth last year.

Baidu’s tepid debt in Hong Kong stood in stark contrast with that of video-sharing app Kuaishou, whose shares almost tripled on their first trading day in February.

One banker working with Bilibili said that appetite remained strong for Chinese tech listings in Hong Kong. “There is an enormous amount of flow and the backlog is only building,” the banker said.

The Bilibili and Baidu listings are among the first in a wave of Chinese tech debuts expected for Hong Kong’s stock market in 2021. Those include ecommerce group JD.com’s logistics arm, Chinese ride-hailing business Didi Chuxing and some of the assets of ByteDance, the company behind video-sharing app TikTok.

Bookrunners on Bilibili’s Hong Kong listing include UBS, Goldman Sachs, JPMorgan and Morgan Stanley.