China’s iQIYI Sets NASDAQ Share Listing

iQIYI, one of China’s video streaming market leaders, has filed for an IPO that will see its shares traded on the New York-based NASDAQ exchange.

The company has filed a prospectus that provides a sketch of financial details and temporarily gives a valuation of $1.5 billion. That figure is provisional and is almost certain to change substantially. Finance industry sources have pointed to the company seeking a capitalization of $8 billion to 10 billion on listing, and iQIYI possibly raising $1 billion of fresh capital.

The latest documents filed with the U.S. Securities & Exchange Commission show that iQIYI last year lost $574 million on $2.7 billion of revenue. It claimed 50.8 million subscribers at the end of 2017.

Baidu previously reported owning 80.5% of iQIYI shares. The new documents show Baidu’s stake diluted to 70%. Baidu will retain control over the company by holding all of iQIYI’s Class B shares, while listing the A shares in American Depositary Receipt format on NASDAQ.

iQIYI is advised by Goldman Sachs, Morgan Stanley, and Credit Suisse.

The streaming service’s losses are driven by strong competition for market share and by heavy investment in acquired and original content. The ongoing content spend required the company to raise $1.3 billion from backers including Hillhouse Capital, IDG and Sequoia Capital.

In 2016 iQIYI’s founder, Gong Yu, and Baidu co-founder Robin Li together tried to take the company private and buy the company from Baidu. Their $2.8-billion offer was challenged by U.S. investors and quickly withdrawn.

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