Chinese video streaming service provider, iQiyi Inc, which is owned by Baidu Inc., the search engine giant in China, has launched an Initial Public offering in New York. According to the filing made to the U.S. Securities and Exchange Commission, the offering is worth $2.4 billion for 125 million shares at a price range of $17 to $19 each.
This listing is supposed to give the company additional financial support, and the company is looking forward to expanding its range of content; approximately 10% will be utilized to strengthen its technology, while the remaining would be directed toward general corporate purposes. With this, the company is also trying to get an equal footing against its Chinese rivals in the market which includes Alibaba Group Holding Ltd’s video service unit Youku Tudou Inc and Tencent Video.
Wang Xiaohui, Chief Content Officer of iQiyi, said in a previous statement in December, “The next phase of Internet video is the upgrading of content, and the realization of content creation requires more people, especially the new force.”
Underwriters have a choice to sell an extra 18.75 million shares which, if executed completely, could scale up the value of the deal to approximately $2.7 billion.
The announcement from iQiyi came in February stating that it has submitted a draft registration statement which is in compliance with the U.S securities Act of 1933. Baidu owns 80.2% of iQiyi and plans to remain the firm’s controlling shareholder after the proposed IPO is complete.
Known as the Netflix of China, iQiyi has around 421 million average monthly active users, and as of December 31, 2017, the average mobile daily active users are approximately 126 million. By the end of 2017, the total hours of video watched by users were approximately 9.2 billion hours on the platform.
Last year Netflix collaborated with iQiyi by providing some of its content like “Stranger Things” which in turn made it easier for Netflix to gain access in the Chinese Market. In an interview with CNBC, which was conducted at the World Economic Forum in Davos, Baidu’s Vice President Ya-Qin Zhang implied more deals to come with Netflix.