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Sogou IPO Set To Raise $540 Million As Search Market Heats Up

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Institutional investors are showing a strong interest in the initial public offering of China search-engine company Sogou ( SOGO ), which is set to begin trading Thursday.

[ibd-display-video id=2533486 width=50 float=left autostart=true]IPO research and advisory firm IPOboutique.com in a report Tuesday said its channel checks reveal, according to underwriter guidance, that the order for shares is "many multiple times oversubscribed," meaning the request for shares is much higher than what's being made available.

China-based Sohu ( SOHU ), an internet service company that includes search and gaming platforms, holds the largest stake in Sogou.

Beijing-based Sogou plans to raise $540 million by offering 45 million American depositary shares at a price range of 11 to 13, giving it a fully diluted market value of about $4.8 billion. IPOboutique.com said its sources indicate there is a "possibility" of an above-range pricing.

Sogou is also backed by China-based internet giant Tencent Holdings ( TCEHY ). Sogou said it plans to deepen its relationship with Tencent, which is China's leader in messaging services.

Sohu, Tencent Holdings and members of Sogou management will together have approximately 97.1% of total voting power, according to the Sogou prospectus . Sohu will be the controlling shareholder.

In another positive sign for the IPO, Sogou Chief Executive Xiaochuan Wang has indicated an interest in purchasing up to 2.4 million of the shares offered. Other company executives have said their interest is up to 750,000 shares.

Sogou will list on the New York Stock Exchange under the ticker SOGO.

Based on data from iResearch, Sogou says it's the second-largest search engine in China by mobile queries, behind Baidu.com ( BIDU ). Other companies investing heavily in search include China e-commerce leader Alibaba ( BABA ).

Baidu on Oct. 26 reported third-quarter revenue that topped views but forecast December-quarter sales that were well below estimates. Baidu revenue rose 29% from the year-ago period to $3.53 billion.

IBD'S TAKE:The biggest stock market winners typically make their major price moves within a few months or years of their initial public offering. So it pays to identify and track companies that are ready to go or have recently gone public. Learn more atIBD's IPO page. IBD also focuses on the best-performing IPOs of the past three years in itsIPO Leaders column .

Other IPOs this week include Workspace Property Trust, a real estate investment company primarily focused on "acquiring, owning and operating high-quality office and flex real estate in prime locations," according to the Workspace IPO prospectus .

Workspace plans to raise $527 million, offering 39 million shares at a range of 12 to 15. It's scheduled to begin trading Friday on the NYSE under the ticker WSPT.

Also ready for its IPO is Bandwidth, which provides a cloud-based communications platform, using an Internet Protocol voice network, with a broad range of software application programming interfaces for voice and text functionality, according to the Bandwidth IPO prospectus .

Bandwidth plans to raise $84 million, offering four million shares in the range of 20 to 22. It will trade Friday on the Nasdaq under the ticker BAND.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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