China game-streaming firm Huya launches $343 million follow-on offering

April 9, 2019

By Julia Fioretti

HONG KONG (Reuters) – Chinese game-streaming company Huya Inc, backed by Tencent Holdings Ltd, has launched a follow-on share offering of about $343 million to raise funds for investment in its content and e-sports partners.

Huya, which went public last year in New York, is part of a growing trend of Chinese tech companies returning to capital markets for cash soon after their initial public offering (IPO).

Huya is selling 13.6 million primary shares, the game-streaming firm company said in a stock exchange filing. At the same time, social media platform YY Inc is selling 4.8 million of Huya shares, the filing showed.

Based on its closing price of $25.23 on Monday, the combined sale could raise as much as $464 million.

There is an over-allotment – or greenshoe option – of up to 15 percent for Huya’s share sale, meaning the firm could raise as much as $394 million if exercised. There is likewise a 15 percent over-allotment for YY’s stake sale.

Huya is China’s biggest live-streaming game platform, according to the offering prospectus, competing with Douyu which plans to go public in New York this year.

China boasts the world’s largest gamer base in e-sports with about 266 million gamers in 2018, the prospectus showed.

Huya’s shares have risen about 65 percent since the firm’s IPO in May, in which it raised $180 million.

Other companies from the 2018 IPO cohort returning for more funds include electric vehicle maker NIO Inc, video streaming company iQIYI Inc, e-commerce firm Pinduoduo Inc and video platform Bilibili Inc.

Bankers are pinning their hopes for 2019 on additional capital raising through follow-on offerings or convertible bonds as the crop of Chinese companies looking to go public thins out after a blockbuster 2018 in terms of IPOs.

Many of the companies that went public in 2018 raised less money than they had hoped for – partly due to global market jitters and partly because investors pushed back against lofty valuations – which will drive follow-on capital raising.

Huya will price its follow-on offering after New York markets close on Tuesday.

Citigroup, Credit Suisse, Goldman Sachs and Jefferies are joint bookrunners for the deal.

(Reporting by Julia Fioretti; Editing by Christopher Cushing)

Comments (No)

Leave a Reply