Qutoutiao, a China-based news aggregation platform backed by internet company Tencent and smartphone producer Xiaomi, has gone public in an $84m initial public offering on the Nasdaq Global Market.
The company issued 12 million American Depositary Shares (ADSs), representing 3 million ordinary shares, priced at $7 each, at the foot of the IPO’s $7 to $9 range. An unnamed affiliate of e-commerce group JD.com bought approximately 2 million ADSs in the offering.
Founded in 2016, Qutoutiao has created an app that aggregates articles and short videos from media companies and freelancers, personalising the feeds in real time based on a user’s tastes and connections. It claims the platform has some 62 million monthly active users.
Approximately $30m of the IPO proceeds will be used to expand the company’s content while about $20m will be used to strengthen its product development and technology infrastructure.
Qutoutiao had initially targeted $300m in proceeds when it filed for the IPO last month. It was valued at $1.6bn following a $200m series B round led by Tencent in March 2018 through a vehicle named Image Flag Investment.
Xiaomi, Shunwei Capital, Advantech Capital, China InnoVision Capital, Shanghai Chuangban Investment Management and Lighthouse Capital Group also took part in the series B round, with Tencent reportedly participating as an existing investor.
Tencent held an 8% stake ahead of the offering that was diluted to 7.7%. Qutoutiao’s largest shareholders are Innotech Group Holdings (38.3% post-IPO), Qu World (13.4%) and News Optimizer (10.1%), vehicles for executives Eric Siliang Tan and Lei Li and a trust called Core Trust Company, respectively.
Citigroup Global Markets, Deutsche Bank Securities, China Merchants Securities (HK), UBS Securities and KeyBanc Capital Markets were underwriters for the IPO.
The underwriters have the 30-day option to buy another 1.8 million ADSs, which would increase proceeds to $96.6m. Qutoutiao’s shares briefly rose to a peak of $17.35 on their first day of trading on Friday but are currently trading at $9.41, giving it a market capitalisation of about $2.74bn.