Weibo set to raise US$193 million from Hong Kong offer, much lower than the US$547 million it had hoped for

Weibo, filing, a test case

Weibo, China’s Twitter, has priced its Hong Kong shares at HK$272.80, joining a number of mainland Chinese companies rushing to list closer to home.

The company, 44.4 per cent owned by Sina Corp and 29.6 per cent by Alibaba Group Holding, will start trading on Wednesday under the stock code 9898 on Hong Kong stock exchange’s main board, it said in a filing on Thursday night.

It expects the total proceeds from the secondary listing to reach HK$1.5 billion (US$193 million), sharply lower than the US$547.3 million the company hoped for earlier. Weibo also has an overallotment option to sell an extra 1.65 million shares, or about 15 per cent of the original offering.

The Nasdaq-listed Weibo filed a draft prospectus with the Hong Kong stock exchange on November 18. A flurry of US-listed Chinese technology companies are turning to Hong Kong for secondary listings as US regulators increase their scrutiny of Chinese firms, which will allow them to minimise the risk in the event of a delisting from US capital markets.

The Securities and Exchange Commission’s Holding Foreign Companies Accountable Act requires foreign companies listed in the US to declare they are not owned or controlled by a foreign government and allow them to be inspected by the Public Company Accounting Oversight Board.

The upcoming listings in Hong Kong of some Chinese tech firms, including Weibo, SenseTime and NetEase-backed music app Cloud Village, are being viewed as a test case, as Beijing has made it mandatory for Chinese firms going public in offshore capital markets to go through a data security review if national security concerns are involved.

A secondary listing in Hong Kong also enables companies to expand their investor base in Asia, enhancing their trading liquidity. Shares listed in Hong Kong are fully fungible, or interchangeable with an issuer’s American depositary receipts (ADRs).

Chinese tech giants Alibaba, the owner of this newspaper, Baidu and JD.com, and electric-car maker Li Auto have had their secondary listings in Hong Kong.

Weibo’s ADRs fell 4.6 per cent to US$34.36 overnight in the US, taking its losses for the year to 16.2 per cent.

Weibo had 566 million monthly active users and 246 million average daily active users as of June. The social media giant generates revenue primarily from customers who buy advertising and marketing services, which accounted for 86 per cent of its total revenue for the six months ended June.

For the third quarter ended September, Weibo’s net profit attributable to shareholders rose more than five times to US$181.7 million, from US$33.8 million a year ago. Its net revenue rose 30 per cent year on year to US$607.4 million, regulatory filings show.

For the fourth quarter of 2021, Weibo estimates its net revenues will increase by 15 to 20 per cent year on year, it said in the filing.

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