Sina Weibo files for $500 million U.S. IPO

SAN FRANCISCO Sat Mar 15, 2014 4:05am IST

A picture illustration shows icons of WeChat and Weibo app in Beijing, December 5, 2013. REUTERS/Petar Kujundzic/Files

A picture illustration shows icons of WeChat and Weibo app in Beijing, December 5, 2013.

Credit: Reuters/Petar Kujundzic/Files

Related Topics

Stocks

   

SAN FRANCISCO (Reuters) - Twitter-like messaging service Weibo Corp filed on Friday to raise $500 million via a U.S. initial public offering, as Chinese companies flock to the American market in record numbers to take advantage of soaring valuations.

Weibo, owned by Sina Corp (SINA.O), becomes the latest Chinese Internet giant to tap U.S. markets, following on the heels of search service Baidu and its own corporate parent.

But underscoring challenges facing Internet firms operating in a heavily censored and tightly controlled media environment, Weibo warned investors in its IPO filing about uncertainty arising from Chinese government regulation.

It highlighted in particular a regulation that came into effect in September, under which Internet users who knowingly make or share information considered defamatory or false could face up to three years' jail time in China.

"The implementation of this newly promulgated judicial interpretation may have a significant and adverse effect on the traffic of our platform and discourage the creation of user generated content," the company said in its filing.

It also warned about potential government intervention in its encryption tools and software - used to prevent spying while safeguarding the privacy of users and their posts.

Weibo said that Beijing requires all "cipher code" products to be registered with the government, though it was unclear whether this applied to social media encryption.

"Because these regulations do not specify what constitutes a cipher code product, we are unsure as to whether or how they apply to us and the encryption software we utilize," the company said in its prospectus.

COME ONE, COME ALL

Still, U.S. investors have long shown an appetite for Chinese companies' stock, hoping to share in some of the spoils of the world's fastest-growing major economy.

U.S. markets may see more IPOs from Chinese corporations in 2014 than in any year since 2010.

Weibo's revenues leapt almost three-fold to $188.3 million in 2013, from $65.9 million in 2012. And its net loss shrank to $38.1 million in 2013 from $102.5 million the previous year.

But its user growth is at risk of tailing off after three years of explosive expansion, as newer messaging apps such as Tencent Holdings Ltd's (0700.HK) WeChat draw users away.

In January, an official government-backed Internet organization reported that user numbers for Chinese microblogs, including Sina Weibo, had fallen 9 percent in 2013.

However, Weibo said the number of its daily users had risen 36 percent to 61.4 million as of the end of December, from the same time a year before.

Weibo hired Goldman Sachs and Credit Suisse to manage its U.S. debut, which it said would boost brand recognition and help retain talent.

Its proposed $500 million target is an estimate worked out solely for the purposes of calculating registration fees.

(Reporting by San Francisco Newsroom. Editing by Andre Grenon and Ken Wills)

FILED UNDER:

Tech Wrap

Reuters Showcase

Sahara Saga

Sahara Saga

Some staff say Sahara has not paid salaries for months   Read 

Jihadi John

Jihadi John

British PM Cameron vows to hunt down 'Jihadi John'   Full Article 

Economic Survey

Economic Survey

India in "sweet spot" of lower deficits, more growth - Economic Survey.  Full Article 

Movie Review

Movie Review

"Ab Tak Chhappan 2" is a futile film: Shilpa Jamkhandikar  Full Article 

DLF Penalty

DLF Penalty

DLF says reviewing $8.4 million SEBI penalty.  Full Article 

Fresh Charges

Fresh Charges

Canadian woman accuses Bikram yoga founder of sexual assault.  Full Article 

Maid Abuse Case

Maid Abuse Case

Hong Kong woman jailed for six years for abusing Indonesian maid.  Full Article 

World Cup 2015

World Cup 2015

Full coverage of cricket world cup in Australia and New Zealand.  Full Coverage 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage