Twitter-like messaging service Weibo Corp filed on Friday to raise $500 million via a US initial public offering (IPO), as Chinese companies flock to the American market in record numbers to take advantage of soaring valuations.
Weibo, owned by Sina Corp, becomes the latest Chinese Internet giant to tap US markets, following on the heels of search service Baidu and its own corporate parent.
Alibaba, which owns a stake in Weibo, is expected to raise about $15 billion in New York this year, in the highest-profile Internet IPO since Facebook’s in 2012.
But underscoring challenges facing Internet firms operating in a heavily censored and tightly controlled media environment, Weibo warned investors 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.
Beijing expressly bans a range of material in media deemed sensitive, from open political opposition to criticism of important officials. Responsibility for policing such content often falls on companies such as Weibo, which could face fines or even revocation of their licences.
Still, US 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.
Weibo, one of several Chinese Twitter-like services, increased ad revenue by 163 per cent to $56 million in the final three months of 2013. Overall revenues leapt almost three-fold to $188.3 million in 2013.
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