Weibo files for Hong Kong secondary listing, as China’s answer to Twitter joins march by Chinese stocks to list nearer home

Nasdaq-listed Weibo files draft prospectus with the Hong Kong stock exchange, paving the way for an IPO
Secondary listing will help Sina Corporation and Alibaba backed Weibo raise funds for content expansion and technology upgrade

IPO

Georgina Lee

Published: 12:00pm, 19 Nov 2021

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Weibo filed a draft prospectus with the Hong Kong stock exchange on Thursday, as China’s leading microblogging platform seeks a secondary listing to raise capital to expand its content offering and upgrade its technology.

The company, 44.4 per cent owned by Chinese online media giant Sina Corporation, will become the latest US-listed Chinese technology firm to seek a listing closer to home after New York-listed Chinese electric vehicle maker Li Auto raised US$1.7 billion in August, according to data from Refinitiv.

The draft filing had no detailed information on the terms of the IPO, or the fundraising size it was targeting. Goldman Sachs, Credit Suisse, Citic Securities and CICC are the joint sponsors of the deal.

Often dubbed the “Twitter of China”, Weibo also counts Alibaba Group Holding, owner of the South China Morning Post, as its second largest shareholder with a 29.6 per cent stake. Weibo’s American depositary receipts (ADRs) traded on Nasdaq give the firm a market capitalisation of about US$9.9 billion. Weibo’s ADRs have risen 5.7 per cent year-to-date, closing at US$43.34 on Wednesday.

“We help the content creators on our platform to engage and interact with their followers and build up their social assets to create social value and monetisation opportunities,” it said in the filing.

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A flurry of US-listed Chinese technology firms have sought secondary listings on the Hong Kong bourse this year amid increased scrutiny from US regulators that could affect their US listing status.

This month, the US Securities and Exchange Commission approved a framework to determine which US-listed Chinese companies have failed to fully allow an audit by US authorities, which could lead to their delisting from American capital markets.

Amid an increase in US tensions over technology and trade in recent years, Chinese giants Alibaba, Baidu and JD.com have all sought secondary listings in Hong Kong. Aside from an escape from potential US action, analysts say a Hong Kong listing also enables these companies to expand their investor base in Asia, enhancing their trading liquidity. Shares listed in Hong Kong are fully fungible, or interchangeable with an issuer’s ADRs.

Weibo had 566 million monthly active users and 246 million average daily active users as of June. The social media giant generates revenue primarily from customers who purchase advertising and marketing services, which accounted for 86 per and 88 per cent of its total revenue for the six months ended June this year, and the full year of 2020, respectively.

In September, Weibo banned at least 52 influential user accounts, some with millions of followers, in response to Beijing’s latest campaign to clean up “misinterpretations” of financial and economic policies on the country’s social media. The central government has been cracking down on online content in the past year, asking platforms to remove any content that is deemed socially harmful.

For the third quarter ended September, Weibo’s net profit attributable to shareholders rose more than five times to US$181.7 million, from US$33.8 million during the same period a year ago. Its total net revenue rose 30 per cent year on year to US$607.4 million, data from regulatory filings show. For the fourth quarter of 2021, Weibo estimates its net revenues will increase by 15 to 20 per cent year on year, it said in the filing.

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