Tencent's E-book Unit Files for Hong Kong IPO
Tencent (700.HK) subsidiary China Literature, China's largest online publisher and e-book provider, has filed for an initial public offering in Hong Kong which could raise as much as $800 million.
In a stock exchange filing, China's answer to Amazon said it has hired Morgan Stanley, Merrill Lynch and Credit Suisse as joint sponsors for the offering. Although the amount to be raised was not disclosed in the filing, previous reports have suggested IPO proceeds could be between $600 million to $800 million which will be used to expand its mobile reading market share and for potential acquisitions.
Since the acquisition of rival Chinese online publisher Cloudary in 2014, China Literature has grown rapidly. Its 2016 revenue increased 59% year-on-year to CNY2.6 billion while its net profit was CNY30.5 million compared with a net loss of CNY354.2 million in 2015.
China Literature, which is 65% owned by Tencent, claims to have 5.3 million writers and 8.4 million literary works available on its platform. The company will remain a subsidiary of Tencent following the listing. Other shareholders include private equity companies The Carlyle Group and Trustbridge Partners.