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Kingsoft Cloud debuts on U.S. stock market amid COVID-19

Xinhua News,NEW YORK
2020-05-09 00:19

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NEW YORK, May 8 (Xinhua) -- Kingsoft Cloud Holdings, a Chinese cloud service and infrastructure provider, launched its initial public offering (IPO) on the Nasdaq stock exchange on Friday under the ticker symbol "KC."

For the IPO, the company issued 30 million American Depositary Shares (ADSs) at 17 U.S. dollars per share for a total offering size of approximately 510 million dollars, according to the company.

It has also granted its underwriters an option, exercisable within 30 days from the date of the final prospectus, to purchase up to an aggregate of 4,500,000 additional ADSs.

JPMorgan, UBS, Credit Suisse and China International Capital Corporation are joint bookrunners for the IPO of the Beijing-based company, which is among the first batch of Chinese companies going public in the U.S. capital market amid the ongoing COVID-19 pandemic.

The U.S. capital market has made a rational judgement in terms of the valuation of cloud computing companies, which bounced back to a normal level despite the pandemic, said He Haijian, chief finance officer of the company.

"Given the company's revenues and profit margins, I believe the market will rationally judge the business valuation of our company," he said.

The company's existing shareholders, Kingsoft Group, Chinese electronics company Xiaomi and French fund manager Carmignac Gestion have all indicated interest in purchasing up to 25 million dollars, 50 million dollars and 50 million dollars of the ADSs, respectively, which is believed to help boost investment sentiment over the IPO.

Kingsoft Cloud, which provides a wide range of products, including cloud computing, networking and storage, is by far the largest independent cloud service provider in China.

It is also the third largest Internet cloud service provider with a market share of 5.4 percent, in terms of revenue from Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and public cloud services in 2019, according to research firm Frost & Sullivan.

Founded in 2012, the company booked 568.3 million dollars in revenue in 2019, a surge of 78.4 percent year over year. Public cloud services have been the backbone of the company's revenue in the last two years, accounting for 95.1 percent and 87.4 percent in 2018 and 2019, respectively.

Its net loss hit 159.6 million dollars and around 141.9 million dollars in 2019 and 2018, respectively.

Wang Yulin, chief executive officer of Kingsoft Cloud, said the company faces few challenges in the short term, as cloud computing is a fast-growing industry and its business cooperation is tech-driven and long-term.

Yet in the long run, it faces broad economic uncertainties caused by the pandemic, which affects their business expansion overseas.

China became the second largest cloud market globally in terms of revenue in 2018, next to the United States, according to Frost & Sullivan. The market size of China's Internet cloud market hit around 7.6 billion dollars in 2019 and is expected to reach nearly 30.7 billion dollars in 2024.

"We are well positioned to capture the large and growing market opportunities brought about by the increased penetration of cloud services into traditional enterprises and public service organizations, application of 5G, artificial intelligence and IoT (Internet of Things), demand for multi-cloud and neutrality, and support by favorable government policies," the company said in its prospectus.
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