Bilibili Inc, which is backed by e-commerce giant Alibaba Group, fell 6.8% when it debuted in Hong Kong on Monday, as analysts said a regulatory crackdown in the United States on Foreign listed companies had generated enthusiasm for the Chinese online video site. .
It was the city’s worst start in six months for a leading stock quote. Bilibili shares fell as much as 6% early in the session. The company has raised HK $ 20.2 billion ($ 2.6 billion) after valuing its shares at HK $ 808 ($ 104) last week.
Bilibili’s fall came despite a positive tone from the Hong Kong Hang Seng Index which rose 0.4% at noon after opening into negative territory. The Hang Seng Tech index fell 0.9%.
The start is the worst for a large company in Hong Kong since shares of Yum China Holdings Inc fell 6.3% at the opening in September after raising $ 2 billion, according to data from Refinitiv.
In his first interview with international media, Bilibili chief executive Chen Rui told Bloomberg he was not concerned about short-term market fluctuations. The company – which has 200 million monthly Gen Y or Gen Z users, mostly Chinese, along with backing from Tencent Holdings Ltd and Alibaba Group Holding Ltd – will use most of the proceeds from the sale. actions to strengthen its content and support its creators. , in anticipation of an explosive growth in online video adoption over the next several years.
‘No one will remember’
All internet users in China – numbering nearly a billion in December – will eventually adopt the format, Chen predicts. The company intends to focus on improving its content and increasing its user base over the next few years rather than profitability, in order to capitalize on the video mega-trend.
“We wouldn’t care too much about the short-term performance of the stock market,” the 43-year-old billionaire entrepreneur told Bloomberg Television, adding that the company has long planned to list in Hong Kong. “No one will remember if your stock rose or fell when it started in 10 years.”
In 2009, Bilibili was born as a forum for game and anime fans like its creator Xu Yi, a then 20-year-old student. But it was Chen who turned the site from an after-school project into a promising venture when the serial entrepreneur took over in 2014. Bilibili has since cleaned up pirated content on his platform while investing a half a billion dollars in broadcast rights since 2018. It has grown into adjacent businesses including live streaming, e-commerce and game publishing, its biggest cash cow.
Along the way, Chen, who previously co-founded app maker Cheetah Mobile Inc, secured investments from Tencent and Alibaba, a rare feat in the Chinese internet arena where newcomers typically align with the internet. ‘one of the twin giants. The company has partnered with Tencent and Alibaba on content production and e-commerce, respectively, and may “further deepen ties” with the two sides, said Chen, who owns about 13% stake, but about 44 % voices. Sony Corp also owns a stake in the company.
‘Caught in the correction’
Aequitas Research Director Sumeet Singh, who publishes on the Smartkarma platform, said the fall in Bilibili’s stock was linked to an ongoing sell-off in most Chinese companies listed in the United States. following plans by the Securities and Exchange Commission (SEC) to delist foreign companies. that do not meet US auditing standards.
“Bilibili’s [American Depository Receipt (ADR)] appears to have been caught in the correction leading to ADR trading below the Hong Kong secondary listing price, ”he said. Bilibili’s U.S.-listed shares have fallen 8.4% since the SEC broke the news last week.
Bilibili sold 25 million shares in the Hong Kong offering and its filings show that Alibaba has bought more than a third of the offered shares, bringing its stake to 8.2% of the company.
There have been around $ 25 billion in secondary announcements in Hong Kong since the start of 2020, according to Refinitiv.
UBS China World Bank Chief Mandy Zhu said the number of so-called “home listings” would continue to rise in Hong Kong. The Swiss bank was a co-sponsor of the Bilibili listing in Hong Kong.
“The advantages of a secondary listing in Hong Kong include a relatively manageable regulatory process and timeline, the ability to attract more investors from mainland China and Hong Kong as well as an efficient capital raising process,” said declared Zhu
“Given the current uncertainty in the Sino-US environment, a secondary listing in Hong Kong could also represent an additional layer of funding channel.”