Cloud service provider Kingsoft's shares soar over 25% in U.S. market debut

Kingsoft

08/05/2020 17:39

May 8 (Reuters) - Shares of China's Kingsoft Cloud Holdings
Ltd  KC.O  jumped over 25% on debut, indicating strong investor
interest at a time when capital markets globally have been
whipsawed by an economic crisis brought on by the COVID-19
pandemic.
    Beijing-based Kingsoft opened at $20.37 per share and rose
to as much as $22.02 in early trade.
    Kingsoft is the first Chinese company to list in the United
States since the coronavirus pandemic outbreak sent markets
tumbling.
    Earlier, the company raised $510 million after pricing its
IPO at $17 per share in the middle of its marketed range,
valuing it at roughly $3.7 billion.
    The cloud services provider had planned to sell 25 million
shares but increased the size of the deal to 30 million on
Friday due to better-than-expected demand from shareholders.
 urn:newsml:reuters.com:*:nL4N2CQ15X
    The IPO is also the first gauge of U.S. investor demand for
Chinese companies going public in New York after a fraud scandal
sent shares in Chinese coffee chain Luckin Coffee  LK.O  into a
free-fall last month.
    Following Luckin's fallout, the U.S. Securities and Exchange
Commission and the Public Company Accounting Oversight Board
(PCAOB) issued a joint statement warning investors against
Chinese companies with regard to risks, including financial
reporting.
    Kingsoft's services include cloud infrastructure as well as
enterprise cloud and artificial intelligence of things. Cloud
computing has so far been one of the sectors boosted by the
novel coronavirus outbreak, as it drives more businesses to
operate digitally and rely on cloud services.
    Existing shareholders Kingsoft Group, Xiaomi and Carmignac
Gestion anchored the IPO, with Kingsoft buying up to $25 million
of the stock offered, and Xiaomi and Carmignac buying up to $50
million each, the company said.
    Kingsoft's estimated revenue for the first three months of
2020 was between 1.35 billion yuan ($190.41 million) and 1.4
billion yuan, an year-on-year increase in the range of 59.6% to
65.5%. The company incurred a net loss of 1.1 billion yuan in
2019, compared with a net loss of 1 billion yuan in 2018.
    JPMorgan, UBS, Credit Suisse and China International Capital
Corp Ltd (CICC) were the lead underwriters for the IPO.
($1 = 7.0901 Chinese yuan renminbi)

 (Reporting by Abhishek Manikandan in Bengaluru;
Editing by Vinay Dwivedi)
 ((abhishek.manikandan@thomsonreuters.com; (within U.S.+1 646
223 8780; outside U.S. +91 80 6182 3583);))