Kingsoft Cloud Raises $510 Million, Set to Lift Off Friday

The Xiaomi-backed company expects to float its shares on the Nasdaq Global Select under "KC," priced at the midpoint of the expected range.

Author: CapitalWatch Staff   

China's Kingsoft Cloud Holdings Ltd. (Nasdaq: KC) prepares to lift off in trading today, priced at $17 per ADS, the midpoint of the expected range.

The cloud computing spin-off of Hong Kong-listed software giant Kingsoft Corp. Ltd. (HKEX: 3888), the company increased its offering to 30 million American depositary shares from the expected 25 million.

KC thus raised $510 million in its online initial public offering at a time when Covid-19 ravages on.

In its filings with the U.S. SEC, Kingsoft said its parent company may acquire up to $25 million in the IPO. Another existing shareholder, smartphone giant Xiaomi Corp. (HKEX: 1810), has indicated interest in $50 million worth of ADSs. French investment management company Carmignac Gestion has offered to buy another $50 million of the float, according to the filing.

Among the underwriters on the deal is Credit Suisse, which was recently hit with the misfortunes of Chinese coffee giant Luckin Coffee (Nasdaq: LK). Other underwriters of KC's offering are by J.P. Morgan Securities LLC, UBS Securities LLC, and China International Capital Corp. Hong Kong Securities Ltd.

Kingsoft claims to be China's largest independent cloud service provider and aims to monetize on the growing "application of 5G, AI and IoT, demand for multi-cloud and neutrality, and support by favorable government policies." It is, however, facing competition from the cloud units of Alibaba Group (NYSE: BABA; HKEX: 9988), Tencent Holdings (HKEX: 0700), and Baidu (Nasdaq: BIDU).

KC reported $568.3 million in revenue for 2019, up 78% year-over-year. Its losses have increased on an annual basis since 2017, reaching $159.6 million last year, according to its filings.