Beijing short video ad agency backed by ByteDance and Xiaomi files for IPO in Hong Kong

A four-year-old Beijing-based advertising agency, which sells time slots on China’s popular short video platforms to advertisers, began offering its shares to investors in Hong Kong on Tuesday with the aim of raising up to HK$1.1 billion (US$141 million), after it locked in tech giants ByteDance and Xiaomi as cornerstone investors.

Uju Holding’s initial public offering sheds light on a rapidly expanding new business ecosystem that has grown alongside the emergence of short video platforms like Douyin, TikTok’s domestic sister app, and Kuaishou as the new entertainment venues in China.

Uju Holding is registered in the Cayman Islands and its underlying operations – providing short video advertising services – are mainly in China, according to its prospectus.

The company’s three per cent share in China’s online short video marketing market – niche but expanding rapidly – makes it the second-biggest player in the field, the company said, citing data from iResearch. The overall market value for online short video marketing has grown at an annual rate of 147 per cent in the last three years, rising from 30.2 billion yuan (US$4.73 billion) in 2018 to 184.6 billion yuan in 2020, the company said.

Uju’s profit increased from 50.1 million yuan in 2018 to 133.2 million yuan in 2020 thanks to an increase in business volume. Its gross profit margin for the same period fell from 9.2 per cent to 5.1 per cent as short video platforms became more aggressive in negotiating advertising prices, according to its prospectus.

The Hong Kong unit of ByteDance, a unicorn with a private market valuation of about US$400 billion, has pledged US$10 million in the offering, while Green Better, a subsidiary of smartphone giant Xiaomi, has pledged to buy US$5 million worth of Uju’s new shares.