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Exits, Private Equity

Tencent’s Online Publishing Platform China Literature Files For Hong Kong IPO

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China Literature, the online publishing and e-book platform under Tencent, is has filed an IPO prospectus in Hong Kong.

China Literature Ltd., an online literature platform operated by Tencent Holdings, has filed an IPO prospectus to list on the Hong Kong Stock Exchange, raising a total of US$8.33 billion (US$1.1 billion) via the float.

The company, formerly known as China Reading Ltd, will issue 151.37 million shares HK$55 apiece, pricing its IPO at top of the HK$48–HK$55 range.

Hong Kong-listed Tencent is the company’s largest shareholder, with a 65.3% stake. Carlyle Group and Trustbridge Partners own 12.2% and 6.2%, respectively.

Tencent announced in March that it would spin off its online publishing and e-book unit and seek a stand-along IPO in Hong Kong. The unit was formally established by Tencent in 2015 after it acquired Cloudary Corp., the literature arm of Shanda Group, the largest Chinese online publishing platform at that time.

China Literature, previously known as China Reading or Yuewen in Chinese,  currently has over four million writers who have published over ten million novels and short stories for 600 million readers. It has published several hugely popular online stories such as Fighter of the Destiny, Perfect World and Longwang Chuanshuo. Some of its more popular novels have been adapted into films.

China Literature recorded revenue of RMB2.55 billion (US$380 million) in 2016, up 100% year-on-year, while net profit reached RMB30 million (US$4.4 million), compared with net loss of RMB354 million (US$52 million) in 2015.

Cloudary Corp. previously tried and failed four times to list in the U.S. Its last attempted IPO was in 2014, but a low valuation and the departure of the company’s CEO dampened investor interest.

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