Kuaishou IPO is another big win for Tencent

Kuaishou, the major competitor of TikTok in China, went public in Hong Kong today. The opening price, HK$338 (US$43.6), almost three times the IPO price of HK$115. The stock closed its first trading at the price of HK$300, giving the company a market cap of HK$1.23 trillion. 

This is already higher than the valuation of ByteDance, which has TikTok and many other businesses, and is much successful outside China, through TikTok and increasingly Lark. However, we will let the pundits discuss the question whether Kuaishou is over valued. 

What we find interesting here is – this is another key investment win for Tencent. According to the prospectus, Tencent owns 21.57% of Kuaishou prior to IPO, after a few rounds of investments. 

Of course, aside from the financial returns, there is also a strategic reason why Tencent bet so heavily on Kuaishou. ByteDance is seen as a challenger to Tencent’s content and social dominance in China. The two companies went to war before, and we wrote about this as early as 2018. 

That aside, Tencent, being the most valued tech company in China, has achieved phenomenal results in investing in the ecosystem. 

Among the top five most valued tech companies in China, aside from Tencent there are also Alibaba, Meituan, Pinduoduo, and JD.com. 

And Tencent is the largest shareholder of Meituan and JD, and the largest corporate shareholder of Pinduoduo (only after the founder, Colin Huang).  Alibaba is the odd one out. 

Tencent’s club of companies is clearly visible in this famous photo taken at Wuzhen Summit, China’s annual tech gathering, in 2017:

In addition, Tencent is also the single largest shareholder of SEA Group, the most valued internet company in Southeast Asia. 

Clearly, something is working, very well.