Today’s blockbusting Hong Kong IPO by Kuaishou saw market cap of the Chinese viral video app reach US$159bn as shares closed at HK$300, increasing the value of Temasek’s initial investment in the TikTok rival by 5.7 times within 14 months, according to Global SWF estimates.

The Singaporean state-owned investor participated in Kuaishou’s Series F round in December 2019, which valued the Tencent-backed company at US$28bn.

Temasek also joined ADIA, GIC and CPP Investments as cornerstone investors in the IPO, deploying an average of at least US$250 million each.

Kuaishou’s shares opened in Hong Kong on Friday at HK$338 (US$43.6) apiece, a 194% jump from its IPO price of HK$115 (US$14.8), but fell back as the day wore on. As a result of the offering, Global SWF estimates Temasek has netted more than US$1.1 billion from asset value growth.

A series of successful IPOs is expected in 2021, following a unique year when tech companies reaped the rewards of the global shift to remote working amid the Covid-19 pandemic. Having carved out a well-crafted strategy in tech venture capital in recent years, Temasek is likely to ride high on the expected IPO surge - notwithstanding the stalled Ant offering.

Kuaishou is one of a few companies that pioneered apps that enable users to upload short videos and livestream. The app is, however, currently running at a loss, according to latest financial data. As a result of huge costs of sales, Kuaishou reported an adjusted loss of CNY7.2 billion (US$1.1 billion) in 9M20 compared with an adjusted profit of CNY1.8 billion in the same period of 2019. Revenue grew 49% to CNY40.6 billion.

Regulation is a looming risk that could knock its value with the Chinese government urging a monthly spending limit on virtual gifts. On average, 58 million app users per month produced nearly CNY48 of revenue in 11M20. As yet, regulators have not enforced a cap, but government concerns could prompt enforcement that would put downward pressure on Kuaishou’s revenue stream.

The Kuaishou offering is one of many IPOs that are set to bolster the value of Temasek’s assets in 2021. In Asia Temasek is set to realise significant gains on its investments in India’s Zomato and PolicyBazaar, while in Indonesia it is looking to make gains from an offering of Tokopedia.

Related funds ADIA CPP GIC Temasek
Related tags Venture Capital IPOs China