HONG KONG: Meitu Inc., a photo retouch app developer backed by Qiming Venture Partners, IDG Capital Partners, Foxconn Technology Group, Tiger Global Management, Sina Weibo and others, has moved to the final stage of its planned Hong Kong initial public offer (IPO).
Founded in 2008 by Chinese entrepreneur Cai Wensheng, Meitu’s flagship mobile app Meitu Xiuxiu, enables users to edit photos for posting on social media apps and reports that as at the end of June 2016, it has 446 million monthly active users.
The company, China’s third largest app platform after Tencent and Alibaba, has developed several apps including Meipai and StickerLabs. It’s estimated that over one billion smartphones have been installed with its Meitu Xiuxiu app in the East Asian region, with users in Japan, Taiwan, Hong Kong, South Korea and Japan. Meitu has scheduled roadshows for next week and its official listing to follow, with the company reportedly targeting to raise as much as $800 million.
In August, Meitu had announced that with the IPO, it was intending to generate proceeds of between $500 million to $1 billion at a valuation of $5 billion. The Meitu IPO would be the second-largest technology IPO for 2016, following the $1.3 billion IPO of Japanese messaging service LINE, which conducted a dual listing in New York and Tokyo in July 2016.
A lack of technology firms in the Hong Kong bourse, as well as pressure by investors to exit via a liquidity event (i.e. IPO) are likely factors that led to Meitu choosing Hong Kong as its IPO destination. This also comes at a time when China is undergoing a period of economic volatility across both its public and private capital markets. It has previously raised $501 million across five venture rounds but compared to Tencent and Alibaba has been losing money, with reported losses in 2015 amounting to an estimated at 750 million yuan while H1 2016 saw it post a loss of 280 million yuan.
